Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. during heaton company’s first two years of opera

During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...

70.2K

Verified Solution

Question

Accounting

During Heaton Company’s first two years of operations, itreported absorption costing net operating income as follows:

Year 1Year 2
Sales (@ $62 per unit)$1,116,000$1,736,000
Cost of goods sold (@ $36 per unit)648,0001,008,000
Gross margin468,000728,000
Selling and administrative expenses*303,000333,000
Net operating income$165,000$395,000

* $3 per unit variable; $249,000 fixed each year.

The company’s $36 unit product cost is computed as follows:

Direct materials$7
Direct labor13
Variable manufacturing overhead2
Fixed manufacturing overhead ($322,000 ÷ 23,000 units)14
Absorption costing unit product cost$36

Forty percent of fixed manufacturing overhead consists of wagesand salaries; the remainder consists of depreciation charges onproduction equipment and buildings.

Production and cost data for the first two years of operationsare:

Year 1Year 2
Units produced23,00023,000
Units sold18,00028,000

Required:

1. Using variable costing, what is the unit product cost forboth years?

2. What is the variable costing net operating income in Year 1and in Year 2?

3. Reconcile the absorption costing and the variable costing netoperating income figures for each year.

Answer & Explanation Solved by verified expert
4.2 Ratings (683 Votes)
Answer to Requirement 1Year 1Unit Product Cost Direct Materials Direct Labor VariableManufacturing OverheadUnit Product Cost 7 13 2Unit Product Cost 22Year 2Unit Product Cost Direct Materials Direct    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Given vector a = (4, -2, 3) and b= (0,3,-5) find:1. lal2. a * b3....

Calculus
Q

Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom...

Accounting
Q

How is Autogenics used to attain deep levels of relaxation?

Psychology
Q

Two children are throwing a ball back and forth straight across the back seat of...

Calculus
Q

ind f x 1 x x 3 4 2 f x 8 x 3 x...

Calculus
Q

A radical expression is simplified when the radicand contains no Check Simplify and no radicals...

Algebra
Q

23. Which of the following statements is true? (a) If the evidence clearly shows that...

Accounting
Q

Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers...

Accounting
Q

10,240 March 8,340 Apni of the month equal to 20% of next month's production requrements....

Accounting
Q

Living Tanks sell tanks and fish and reptiles throughout Victoria. During March 2022, cash sales...

Accounting
Q

1. Create a sales budget and Schedule of Cash Collections based on the following information....

Accounting
Q

Cul de las siguientes cuentas no aparecera en un cuadro de costo de bienes manufacturados?...

Accounting