Company's first two years of operations, it reported absorption costing net operating income as follows Sales (@$63
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Sales (@$63 per unit) Cost of goods sold (@ $38 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable: $249,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials Direct labor Year 1 $ 1,008,000 608,000 400,000 297,000 $ 103,000 Variable manufacturing overhead Fixed manufacturing overhead ($336,000+ 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 Year 2 $ 1,638,000 988,000 650,000 327,000 $ 323,000 $9 10 3 16 $38 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. Sales (@$63 per unit) Cost of goods sold (@ $38 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable: $249,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials Direct labor Year 1 $ 1,008,000 608,000 400,000 297,000 $ 103,000 Variable manufacturing overhead Fixed manufacturing overhead ($336,000+ 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 Year 2 $ 1,638,000 988,000 650,000 327,000 $ 323,000 $9 10 3 16 $38 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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Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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