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Operating data for Siesta Company and its absorption costing income statements for the last two years are presented below. Required: a) What was the unit
Operating data for Siesta Company and its absorption costing income statements for the last two years are presented below. Required: a) What was the unit product cost in each year under variable costing Year Year 2 Units in beginning inventory Units produced Units sold Year 1 2,000 14,000 15,000 Year 2 1,000 14,000 12.000 $ 240,000 $ 320,000 Total unit product cost Sales Cost of Goods Sold Beginning inventory Add Cost of Goods Manufactured Goods available for sale Les Ending inventory Cost of Good Sold Gross margin Selling and administrative expenses Operating income 21,686 151,800 173486 10,84) 163.643 77,357 1 b) Prepare now income statements for each year using variable costing Siena Company Variable Costing Income Statement Year 1 10.843 151,800 162,643 32,529 130114 189,886 81,200 10366 Year 2 Sales Less: Variable expenses $ Fixed manufacturing overhead Direct material per unit Direct labour per Variable Manufacturing overhead per unit $ $ S s 58.000 $ 2.00 $ 3.00 5 1.70 $ 58000 2.00 3.00 1.70 Contribution margin Variable Manufacturing overhead per unit Variable Selling & Admin costs per unit 1.70$ 2.60 $ s 1.70 2.60 Contribution margin Operating income on c) Reconcile the difference in Operating Income between Variable costing and absorption costing Variable costing operating income Absorption conting operating income
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