During Heaton Company Solution 1.Prepare a variable costing contribution format income statement for each year. 2.Reconcile the absorption costing and the variable costing net operating income figures for each year.(Losses should be indicated by a minus sign.) .

1. During Heaton Company
During Heaton Company
Solution
1.Prepare a variable costing contribution format income statement for each year.
2.Reconcile the absorption costing and the variable costing net operating income figures for each
year.(Losses should be indicated by a minus sign.)
Variable Costing Income Statement
Year 1 Year 2
Sales 1071000 1701000
Variable expenses:
Variable Cost of good sold 374000 594000
Variable Selling & Administartion Expenses 51000 425000 81000 675000
Contribution Margin 646000 1026000
Fixed expenses:
Fixed Manufacturing Overhead 418000 418000
Fixed Selling & Administartion Expenses 252000 670000 252000 670000
Net operating Income -24000 356000