Problem 6-19 Variable Costing Income Statement; Reconciliation [LO6-2, LO6-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: 15 points Year 1 Year 2 $ 1,88,888 1,728,880 Sales (e $64 per unit) Cost of goods sold ( $36 per unit) Gross margin Selling and administrative expenses Net operating income 612,008 476,808 299,800 972,80 eBook 756,800 329,800 Print s 1177,000427,880 References $3 per unit variable; $248,000 fixed each year The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($286,000 22,000 units) Absorption costing unit product cost 12 13 s 36 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 operations are Units produced Units sold Year 1 Year 2 22,000 22,00 17,008 27,000 Next > Mc Prev 1 of 2