3e8è This Qu 14.28 points During Heaton Company\'s first two years of operations

Question

3e8è This Qu 14.28 points During Heaton Company's first two years of operations, the company reported absorpion costing net operating income as follows: $ 976,000 $1,586,000 496,000 806,000 Sales (@$61 per unit) Cost of goods sold (@$31 per unit) Gross margin Selling and administrative expenses 480,000 298,000 780,000 328,000 Net operating income S 182,000 S 452,000 $3 per unit variable; $250,000 fixed each year The company's $31 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Foxed manufacturing overhead ($252,000 21,000 units)1 Absorption costing unit product cost s 31 29 F2 od Fa F6 4

Explanation / Answer

1 Year 1 Year 2 Sales 976000 1586000 Variable expenses: Variable cost of goods sold 304000 494000 Variable selling and administrative expenses 48000 78000 Total Variable expenses 352000 572000 Contribution margin 624000 1014000 Fixed expenses: Fixed manufacturing overhead 252000 252000 Fixed selling and administrative expenses 250000 250000 Total Fixed expenses 502000 502000 Net operatimg income(loss) 122000 512000 2 Year 1 Year 2 Variable costing net income 122000 512000 Add(deduct) fixed manufacturing overhead deferred in(released from) 60000 -60000 Absorption costing net operating income 182000 452000

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