Prepare a variable costing contribution format income statem

Prepare a variable costing contribution format income statement for each year. (Input all amount as positive value. In case of net operating loss it should be indicated with a minus sign. Omit the \"$\" sign in your response.)

Determine the absorption costing and variable costing net operating income figures for each year. (Negative amount should be indicated by a minus sign. Omit the \"$\" sign in your response.)

Requirement 1:

Prepare a variable costing contribution format income statement for each year. (Input all amount as positive value. In case of net operating loss it should be indicated with a minus sign. Omit the \"$\" sign in your response.) Requirement 2: Determine the absorption costing and variable costing net operating income figures for each year. (Negative amount should be indicated by a minus sign. Omit the \"$\" sign in your response.)

The following Information apples to the questions displayed below.] During Heaton Company\'s first two years of operations, the company reported absorption costing net operating Income as follows: Year 1 Year 2 Sales ($60 per unit) Cost of goods sold ($29 per unit) Gross margin Selling and administrative expenses\' Net operating Income (loss) $1,020,000 493,000 527,000 303,000 $224,000 $1,620,000 783,000 837,000 333,000 $504,000 $3 per unit varlable; $252,000 fixed each year. The company\'s $29 unit product cost Is computed as follows: Direct materlals Direct labor Varlable manufacturing overhead Fixed manufacturing overhead ($264,000 Absorption costing unlt product cost $5 10 2 12 %29 22,000 units)

Solution

1 Heaton Company Variable Costing Incoe Statement Year 1 Year 2 Sales $      1,020,000 $      1,620,000 (17000 x $60) (27000 x $60) Variable expenses: Variable cost of goods sold             289,000             459,000 (17000 x $17*) (27000 x $17) Variable selling and administrative expenses               51,000               81,000 (17000 x $3) (27000 x $3) Total variable expenses             340,000             540,000 Contribution margin $         680,000 $      1,080,000 Fixed expenses: Fixed manufacturing overhead             264,000             264,000 Fixed selling and administrative expenses             252,000             252,000 Total fixed expenses             516,000             516,000 Net operating income $         164,000 $         564,000 *$5+10+2 = $17 Year 1 Year 2 Units in beginning inventory 0 5000 + Units produced 22000 22000 - Units sold 17000 27000 = Units in ending inventory 5000 0 2 Reconciliation of Variable costing and Ansorption costing Net operating incomes Year 1 Year 2 Variable costing net opearting income (loss) $               164,000 $               564,000 Add(deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing($12 x 5000)                      60,000                   (60,000) Absorption costing net opearting income $               224,000 $               504,000