During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows:
| Year 1 | Year 2 | ||||
| Sales (@ $60 per unit) | $ | 1,080,000 | $ | 1,680,000 | |
| Cost of goods sold (@ $33 per unit) | 594,000 | 924,000 | |||
| Gross margin | 486,000 | 756,000 | |||
| Selling and administrative expenses* | 303,000 | 333,000 | |||
| Net operating income | $ | \183,000\ | $ | 423,000 | |
* $3 per unit variable; $249,000 fixed each year.
The company’s $33 unit product cost is computed as follows:
| Direct materials | $ | 6 |
| Direct labor | 10 | |
| Variable manufacturing overhead | 4 | |
| Fixed manufacturing overhead ($299,000 ÷ 23,000 units) | 13 | |
| Absorption costing unit product cost | $ | 33 |
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 operatons are:
| Year 1 | Year 2 | |
| Units produced | 23,000 | 23,000 |
| Units sold | 18,000 | 28,000 |
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.
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During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,134,000 $ 1,764,000 Cost of goods sold (@ $27 per unit) 486,000 756,000 Gross margin 648,000 1,008,000 Selling and administrative expenses* 308,000 338,000 Net operating income $ \340,000\ $ 670,000 * $3 per unit variable; $254,000 fixed each year. The company’s $27 unit product cost is computed as follows: Direct materials $ 5...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
* $3 per unit variable; $250,000 fixed each year.
The company’s $43 unit product cost is computed as follows:
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 operatons
are:
Required:
1. Using variable costing, what is the unit product...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 930,000 $ 1,550,000 Cost of goods sold (@ $35 per unit) 525,000 875,000 Gross margin 405,000 675,000 Selling and administrative expenses* 293,000 323,000 Net operating income $ \112,000\ $ 352,000 * $3 per unit variable; $248,000 fixed each year. The company’s $35 unit product cost is computed as follows: Direct materials $ 7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,054,000 $ 1,674,000 Cost of goods sold (@ $32 per unit) 544,000 864,000 Gross margin 510,000 810,000 Selling and administrative expenses* 303,000 333,000 Net operating income $ \207,000\ $ 477,000 * $3 per unit variable; $252,000 fixed each year. The company’s $32 unit product cost is computed as follows: Direct materials $ 7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per
unit)
$
1,116,000
$
1,736,000
Cost of goods
sold (@ $42 per unit)
756,000
1,176,000
Gross
margin
360,000
560,000
Selling and
administrative expenses*
305,000
335,000
Net operating
income
$
\55,000\
$
225,000
* $3 per unit variable; $251,000 fixed each year.
The company’s $42 unit product cost is computed as follows:
Direct materials
$
7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $40 per unit)
680,000
1,080,000
Gross margin
374,000
594,000
Selling and administrative expenses*
300,000
330,000
Net operating income
$
74,000
$
264,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $40 unit product cost is computed as follows:
Direct materials
$
7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,134,000 $ 1,764,000 Cost of goods sold (@ $38 per unit) 684,000 1,064,000 Gross margin 450,000 700,000 Selling and administrative expenses* 307,000 337,000 Net operating income $ 143,000 $ 363,000 * $3 per unit variable; $253,000 fixed each year. The company’s $38 unit product cost is computed as follows: Direct materials $ 9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,134,000 $ 1,764,000 Cost of goods sold (@ $35 per unit) 630,000 980,000 Gross margin 504,000 784,000 Selling and administrative expenses* 307,000 337,000 Net operating income $ 197,000 $ 447,000 * $3 per unit variable; $253,000 fixed each year. The company’s $35 unit product cost is computed as follows: Direct materials $ 8...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,054,000 $ 1,674,000 Cost of goods sold (@ $33 per unit) 561,000 891,000 Gross margin 493,000 783,000 Selling and administrative expenses* 301,000 331,000 Net operating income $ \192,000\ $ 452,000 * $3 per unit variable; $250,000 fixed each year. The company’s $33 unit product cost is computed as follows: Direct materials $ 7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,008,000
$
1,638,000
Cost of goods sold (@ $28 per
unit)
448,000
728,000
Gross margin
560,000
910,000
Selling and administrative
expenses*
293,000
323,000
Net operating income
$
\267,000\
$
587,000
* $3 per unit variable; $245,000 fixed each year.
The company’s $28 unit product cost is computed as follows:
Direct
materials
$
6...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
* $3 per unit variable; $250,000 fixed each year.
The company’s $43 unit product cost is computed as follows:
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 operatons
are:
Required:
1. Using variable costing, what is the unit product...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per
unit)
$
1,116,000
$
1,736,000
Cost of goods
sold (@ $42 per unit)
756,000
1,176,000
Gross
margin
360,000
560,000
Selling and
administrative expenses*
305,000
335,000
Net operating
income
$
\55,000\
$
225,000
* $3 per unit variable; $251,000 fixed each year.
The company’s $42 unit product cost is computed as follows:
Direct materials
$
7...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $40 per unit)
680,000
1,080,000
Gross margin
374,000
594,000
Selling and administrative expenses*
300,000
330,000
Net operating income
$
74,000
$
264,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $40 unit product cost is computed as follows:
Direct materials
$
7...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,008,000
$
1,638,000
Cost of goods sold (@ $28 per
unit)
448,000
728,000
Gross margin
560,000
910,000
Selling and administrative
expenses*
293,000
323,000
Net operating income
$
\267,000\
$
587,000
* $3 per unit variable; $245,000 fixed each year.
The company’s $28 unit product cost is computed as follows:
Direct
materials
$
6...
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