During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows:
Year Year
Sales @ $ per unit $ $
Cost of goods sold @ $ per unit
Gross margin
Selling and administrative expenses
Net operating income $ $
$ per unit variable; $ fixed each year.
The companys $ unit product cost is computed as follows:
Direct materials $
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead $: units
Absorption costing unit product cost $
Production and cost data for the first two years of operations are:
Year Year
Units produced
Units sold
Required:
Using variable costing, what is the unit product cost for both years?
What is the variable costing net operating income in Year and in Year
Reconcile the absorption costing and the variable costing net operating income figures for each year.
