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

A

B

C

1

2

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5

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10

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Chapter 4: Applying Excel
Data
Selling price per unit	$334
Manufacturing costs:
Variable per unit produced:
Direct materials	$135
Direct labor	$54
Variable manufacturing overhead	$26
Fixed manufacturing overhead per year	$119,600
Selling and administrative expenses:
Variable per unit sold	$4
Fixed per year	$58,000
	Year 1	Year 2
Units in beginning inventory	0
Units produced during the year	2,600	2,300
Units sold during the year	2,400	2,400

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 $150,000 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.

(a) Would this change result in a bonus being paid to the CEO?

• Yes

• No

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