During Heaton Company's first two years of operations, the company reported operating profit as follows (absorption costing basis)
Year
Year 2
Revenge 25
C1000 000 C1250000
Less cost of goods sold
Beginning inventory
90.000
Add cost of goods manufactured (1)
810.000
810.000
Goods available for sale
10.000
900.000
Less ending inventory to 18)
90.000
Cost of goods sold
720.000 500.000
Gross margin
280.000
350 000
Loss selling and administrative expenses 210 000 230000
Operating profit
6.70000
120 000
O
2
including £130,000 of fixed selling and administrative expenses
The companys £18 unit product cost is computed as follows:
Direct mat
Doctor
Variable manufacturing overhead
.
manufacturing overhead 270.000/45.000 unit)
Un productos
C
Production and cost data for the two years are:
Yeart Year 2
Un produced 45.000 45.000
Un sold 40.000 50.000
Required
1- Prepare a statement of profit or loss for each year in the contribution format using
variable costing