Problems - Student Name: Marisa Spanial Class: Accounting...

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Student Name: Marisa Spanial Class: Accounting 2902 Chapter 7 Probs. Problem 07-11 Requirement 1: Computation of unit product cost under variable costing: Direct materials $4 Direct labor 7 Variable manufacturing overhead 1 Variable costing unit product cost $12 Correct! HEATON COMPANY Variable Costing Income Statement Year 1 Year 2 Unit Sales 40,000 50,000 Sales $1,000,000 $1,250,000 Variable expenses: Variable cost of goods sold 480,000 600,000 Variable selling and administrative expense 80,000 100,000 Total variable expenses 560,000 700,000 Contribution margin 440,000 550,000 Fixed expenses: Fixed manufacturing overhead 270,000 270,000 Fixed selling and administrative expenses 130,000 130,000 Total fixed expenses 400,000 400,000 Net operating loss $40,000 $150,000 Correct! Correct! Requirement 2: Reconciliation: Variable costing net operating income $40,000 $150,000 Add (deduct): Fixed overhead cost deferred in inventory under absorption costing (30,000) 30,000 Absorption costing net operating income $70,000 $120,000 Correct! Correct!
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Given Data P07-11: HEATON COMPANY Income Statement Year 1 Year 2 Sales ($25 per unit) $1,000,000 $1,250,000
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This note was uploaded on 03/23/2011 for the course ACCOUNTING 2902 taught by Professor Maryanngaffney during the Spring '11 term at Temple.

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Problems - Student Name: Marisa Spanial Class: Accounting...

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