Question
In: Accounting
Calculation of absorption costing net operating income
Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.
What was the absorption costing net operating income last year?
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Expert Solution
Calculation of net operating income under Absorption costing:
|
Particulars |
Amount |
|
Variable costing net operating income last year |
$86,000 |
|
Less : Fixed manufacturing overhead cost released from inventory |
(32,000) |
|
Absorption costing net operating income last year |
$54,000 |
Absorption costing net operating income for last year is $54,000.
Absorption costing net operating income last year = Variable costing net operating income last year - Fixed manufacturing overhead cost released from inventory
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Manop, Inc. is facing a problem with their 4th quarter absorption costing net operating income on...
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operating income target is $250,000 and the data so far is as
follows:
Sales Revenue
$600,000
($200/unit)
Variable COGS
$240,000
($80/unit)
Fixed manufacturing overhead
$70,000
Fixed S&A
$50,000
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Finished Goods Inventory as of December 25
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Up until this quarter, Manop, Inc. has had a policy of having
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During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,071,000
$
1,701,000
Cost of goods sold (@ $34 per unit)
578,000
918,000
Gross margin
493,000
783,000
Selling and administrative expenses*
300,000
330,000
Net operating income
$
193,000
$
453,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $34 unit product cost is computed as follows:
Direct materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per unit)
$
1,037,000
$
1,647,000
Cost of goods sold (@ $38 per
unit)
646,000
1,026,000
Gross margin
391,000
621,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\91,000\
$
291,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct
materials
$
7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per
unit)
$
915,000
$
1,525,000
Cost of goods
sold (@ $41 per unit)
615,000
1,025,000
Gross
margin
300,000
500,000
Selling and
administrative expenses*
292,000
322,000
Net operating
income
$
8,000
$
178,000
* $3 per unit variable; $247,000 fixed each year.
The company’s $41 unit product cost is computed as follows:
Direct materials
$
10...
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reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
992,000
$
1,612,000
Cost of goods sold (@ $38 per unit)
608,000
988,000
Gross margin
384,000
624,000
Selling and administrative expenses*
298,000
328,000
Net operating income
$
86,000
$
296,000
* $3 per unit variable; $250,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $35 per
unit)
595,000
945,000
Gross margin
459,000
729,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\159,000\
$
399,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $35 unit product cost is computed as follows:
Direct
materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
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reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $60 per unit)
$
900,000
$
1,500,000
Cost of goods sold (@ $38 per unit)
570,000
950,000
Gross margin
330,000
550,000
Selling and administrative expenses*
294,000
324,000
Net operating income
$
36,000
$
226,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
8...
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