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Question: During Heaton Companys first two years of operations, the company reported absorption costing ...

During Heaton Companys first two years of operations, the company reported absorption costing net operating income as follows:

	Year 1		Year 2
Sales (@ $61 per unit)	$	1,037,000	$	1,647,000
Cost of goods sold (@ $40 per unit)		680,000		1,080,000
Gross margin		357,000		567,000
Selling and administrative expenses*		309,400		339,400
Net operating income	$	47,600	$	227,600

* $3 per unit variable; $258,400 fixed each year.

The companys $40 unit product cost is computed as follows:

Direct materials	$	9
Direct labor		8
Variable manufacturing overhead		3
Fixed manufacturing overhead ($440,000 22,000 units)		20
Absorption costing unit product cost	$	40

Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings.

Production and cost data for the two years are:

	Year 1	Year 2
Units produced	22,000	22,000
Units sold	17,000	27,000

Required:

1.

Prepare a variable costing contribution format income statement for each year. Can you please help me out with the 1A answer// this is what I currently have: Available options for the Income Statement include: Advertising Beginning merchandise inventory Commissions Depreciation Ending merchandise inventory Fixed manufacturing overhead Fixed selling and administrative expenses Indirect labor Indirect materials Purchases Sales Variable cost of goods sold Variable selling and administrative expenses

Required: 1. Prepare a variable costing contribution format income statement for each year. Heaton Company Variable Costing Income Statement Year 1 Year 2 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses Net operating income (loss)