2 (b). What is the net operating income (loss) in Year 2 under absorption costing?

3. Make a note of the absorption costing net operating income (loss) in Year 2.

At the end of Year 1, the companys board of directors set a target for Year 2 of net operating income of $130,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 4,200 units.

(b). What is the net operating income (loss) in Year 2 under absorption costing?

2. Change all of the numbers in the data area of your worksheet so that it looks like this