Questions and 3. Format

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows Year 1 $ 930,000 Year 2 1,550,000 525,000875,000 675,000 295,000325,000 350,000 Sales ( $62 per unit) Cost of goods sold ( $35 per unit) Gross margin Selling and administrative expenses* Net operating income 405,000 1110,000 *$3 per unit variable; $250,000 fixed each year The company's $35 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,00020,000 units) Absorption costing unit product cost 13 12 $ 35 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 first two years of operations are Year 1 Year 2 20,000 20,000 15,000 25,000 Units produced Units sold Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year. Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income