1
answer
0
watching
84
views
28 Sep 2019
During Heaton Companyâs first two years of operations, thecompany reported absorption costing net operating income asfollows:
Year 1 Year 2 Sales (@ $62 perunit) $ 1,116,000 $ 1,736,000 Cost of goods sold(@ $30 per unit) 540,000 840,000 Gross margin 576,000 896,000 Selling andadministrative expenses* 300,000 330,000 Net operatingincome $ 276,000 $ 566,000
* $3 per unit variable; $246,000fixed each year.
The companyâs $30 unit productcost is computed as follows:
Directmaterials $ 8 Direct labor 9 Variablemanufacturing overhead 1 Fixed manufacturingoverhead ($276,000 ÷ 23,000 units) 12 Absorption costingunit product cost $ 30
Forty percent of fixed manufacturing overhead consists of wagesand salaries; the remainder consists
of depreciation charges on production equipment and buildings.
Production and cost data for thetwo years are:
Year 1 Year 2 Units produced 23,000 23,000 Units sold 18,000 28,000
Required:
1. Prepare a variable costing contribution format income statementfor each year.
2. Reconcile the absorption costing and the variable costing netoperating income figures for each year. (Losses should beindicated by a minus sign.)
PLEASE PLEASE PLEASE ANSWER ALL QUESTIONS COMPLETELY :)
During Heaton Companyâs first two years of operations, thecompany reported absorption costing net operating income asfollows: |
Year 1 | Year 2 | |||
Sales (@ $62 perunit) | $ | 1,116,000 | $ | 1,736,000 |
Cost of goods sold(@ $30 per unit) | 540,000 | 840,000 | ||
Gross margin | 576,000 | 896,000 | ||
Selling andadministrative expenses* | 300,000 | 330,000 | ||
Net operatingincome | $ | 276,000 | $ | 566,000 |
* $3 per unit variable; $246,000fixed each year. |
The companyâs $30 unit productcost is computed as follows: |
Directmaterials | $ | 8 |
Direct labor | 9 | |
Variablemanufacturing overhead | 1 | |
Fixed manufacturingoverhead ($276,000 ÷ 23,000 units) | 12 | |
Absorption costingunit product cost | $ | 30 |
Forty percent of fixed manufacturing overhead consists of wagesand salaries; the remainder consists |
Production and cost data for thetwo years are: |
Year 1 | Year 2 | |
Units produced | 23,000 | 23,000 |
Units sold | 18,000 | 28,000 |
Required: |
1. | Prepare a variable costing contribution format income statementfor each year. |
2. | Reconcile the absorption costing and the variable costing netoperating income figures for each year. (Losses should beindicated by a minus sign.) |
PLEASE PLEASE PLEASE ANSWER ALL QUESTIONS COMPLETELY :)
Sixta KovacekLv2
28 Sep 2019