Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below:

Whitman Company Income Statement
Sales (39,000 units $43.10 per unit)	$	1,680,900
Cost of goods sold (39,000 units $22 per unit)		858,000
Gross margin		822,900
Selling and administrative expenses		448,500
Net operating income	$	374,400

The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 per unit product cost given above is computed as follows:

Direct materials	$	10
Direct labor		5
Variable manufacturing overhead		3
Fixed manufacturing overhead ($220,000 55,000 units)		4
Absorption costing unit product cost	$	22

Pl make the co's income statement :

1. Prepare the company's income statement in the contribution format using variable costing.

White Comany

Variable costing income statement

Variable Expenses

Fixed Expenses

2- Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement.

Reconciliation of variable costing and absorption costing net operating income

variable costing net operating income ( loss)

Absorption costing net operating income (loss0

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

	Year 1		Year 2
Sales (@ $63 per unit)	$	1,197,000			$	1,827,000
Cost of goods sold (@ $38 per unit)		722,000				1,102,000
Gross margin		475,000				725,000
Selling and administrative expenses*		303,000				333,000
Net operating income	$	172,000		$	392,000

* $3 per unit variable; $246,000 fixed each year.

The company's $38 unit product cost is computed as follows:

Direct materials	$	5
Direct labor		10
Variable manufacturing overhead		4
Fixed manufacturing overhead ($456,000 24,000 units)		19
Absorption costing unit product cost	$	38

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		24,000				24,000
Units sold		19,000				29,000

Required:

3-Prepare a variable costing contribution format income statement for each year.

4-. Reconcile the absorption costing and the variable costing net operating income figures for each year.

Piedmont Company segments its business into two regionsNorth and South. The company prepared the contribution format segmented income statement shown below:

		Total Company		North		South
Sales	$	675,000	$	450,000	$	225,000
Variable expenses		405,000		315,000		90,000
Contribution margin		270,000		135,000		135,000
Traceable fixed expenses		150,000		75,000		75,000
Segment margin		120,000	$	60,000	$	60,000
Common fixed expenses		65,000
Net operating income	$	55,000

Required:

5- Compute the companywide break-even point in dollar sales.

2. Compute the break-even point in dollar sales for the North region.

6- Compute the break-even point in dollar sales for the South region.

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