Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: $1,599,800 Whitman Company Income Statement Sales (38,000 units X $42.10 per unit) Cost of goods sold (38,000 units x $24 per unit) Gross margin Selling and administrative expenses Net operating income 912,000 687,800 475,000 212,800 $ The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: $11 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($250,000 = 50,000 units) Absorption costing unit product cost $ 24 Required: 1. Redo the company's income statement in the contribution format using variable costing. 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 above. Complete this question by entering your answers in the tabs below. Required Required | 1 | 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold Fixed selling and administrative expense Contribution margin Fixed expenses: Fixed selling and administrative expense Net operating income $ 0 Required Required 1 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 above. (Enter any losses or deductions as a negative value.) Show less Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing net operating income During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $62 per unit) Cost of goods sold (@ $32 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $1,054,000 544,000 510,000 296,000 $\214,000 Year 2 $1,674,000 864,000 810,000 326,000 $ 484,000 $3 per unit variable; $245,000 fixed each year. The company's $32 unit product cost is computed as follows: $ 5 9 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($352,000 - 22,000 units) Absorption costing unit product cost $32 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 Units produced 22,000 22,000 Units sold 17,000 27,000 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 Required Required Using variable costing, what is the unit product cost for both years? Unit product cost Required Required Required What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) Required Required Required 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