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

(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?

(c) What is the net operating income (loss) in Year 1 under variable costing?

(d) What is the net operating income (loss) in Year 2 under variable 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 $170,000 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 4,600 units.

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

A B 1 Chapter 6: Applying Excel 2 3 Data 4 $ 369 5 Selling price per unit Manufacturing costs: Variable per unit produced: Direct materials 6 7 141 $ $ 8 Direct labor 58 A 37 124,200 9 Variable manufacturing overhead 10 Fixed manufacturing overhead per year 11 Selling and administrative expenses: 12 Variable per unit sold 7 13 Fixed per year $ 64,000 14 15 Year 1 Year 2 16 0 17 Units in beginning inventory Units produced during the year Units sold during the year 2,700 2,400 2,300 2,400 18