MANAGERIAL ACCOUNTING Student Name:

5th Canadian Edition Class:

Garrison, Noreen and Chesley SPATS Problem 7-9

Press F5, enter a cell reference, and click on <OK> to go to one of the following data entry areas:

REPORT REFERENCE PRINT AREA

Income Statement M1 M5:O28
Absorption & Variable Costing Reconciliation M49 M53:O68
Given Data T1
REPORT REFERENCE
Absorption & Variable Costing Reconciliation M49
Given Data T1

0
0
SPATS Problem 7-9

HEATON COMPANY
Income Statement

REPORT REFERENCE
Income Statement M1
Given Data T1

0
0
SPATS Problem 7-9

HEATON COMPANY
Absorption & Variable Costing Reconciliation

Year 1 Year 2
Given Data:

HEATON COMPANY

Net Income:
Year 1 Year 2
Sales @ $25 $1,000,000 $1,250
Less cost of goods sold:
Beginning inventory 0 90,000
Add cost of goods manufactured @ $18 810,000 810,000
Goods available for sale 810,000 900,000
Less ending inventory @ $18 90,000 0
Cost of goods sold 720,000 900,000
Gross margin 280,000 350,000
Less selling and admin expenses* 210,000 230,000
Net income $70,000 $120,000

*Per unit variable cost $2

Fixed each year $130,000

Unit product cost:

Direct materials $4
Direct labour 7
Variable manufacturing overhead 1
Fixed manufacturing overhead 6
Unit product cost $18

Production and cost data:

Year 1 Year 2
Units produced 45,000 45,000
Units sold 40,000 50,000

Check figure:
Year 1 net income $40,000
HEATON COMPANY