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

1	Chapter 6: Applying Excel
2
3	Data
4	Selling price per unit	$349
5	Manufacturing costs:
6	Variable per unit produced:
7	Direct materials	$156
8	Direct labor	$58
9	Variable manufacturing overhead	$36
10	Fixed manufacturing overhead per year	$150,000
11	Selling and administrative expenses:
12	Variable per unit sold	$2
13	Fixed per year	$60,000
14
15		Year 1	Year 2
16	Units in beginning inventory	0
17	Units produced during the year	3,000	2,500
18	Units sold during the year	2,700	2,700

If your formulas are correct, you should get the correct answers to the following questions.

(a) What is the net operating income (loss) in Year 1 under absorption costing?

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

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

(c) Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 2,700 units per year?

multiple choice 2

• Yes

no