A Company This is the first year so there is no beginning inventory BUDGETED: Sales 6,000 units [at $30 per unit) Production 7,000 units Variable mfg. cost $10 per unit [DM-$5; DL-$3; Var. mfg. overhead-$2] Fixed mfg. cost $ 4 per unit [based on planned production of 7,000 units] Var. S&A cost $ 1 per unit [based on units sold] Fixed S&A cost $ 2 per unit [based on planned sales of 6,000 units] ACTUAL: Sales Production 6,200 units @ $30 6,400 units There were no efficiency variances. There were no material, labour or variable overhead spending variances. There were no fixed S&A spending variances. We spent the same as budgeted. There was a $2,000 unfavourable fixed overhead spending variance. Fixed overhead denominator variance must be calculated. REQUIRED: Make an excel spreadsheet, using cell references wherever possible, that will allow a user to enter the above numbers and... 1) Compute net income using Absorption costing. 2) Compute net income using Variable (direct) costing. 3) Reconcile the difference in net income. Absorption vs. Variable Costing Assignment (PART TWO) B Company Beginning inventory is 4,000 units All rates were the same in the previous year. BUDGETED: Sales 60,000 units [at $50 per unit] Production 75,000 units Variable mfg. cost $20 per unit [DM-$8; DL-$7; Var. mfg. overhead-$5] Fixed mfg. cost $10 per unit [based on planned prod. of 75,000 units] Var. S&A cost $ 3 per unit [based on units sold] Fixed S&A cost $ 2 per unit [based on planned sales of 60,000 units] Sales Production ACTUAL: 58,000 units @ $50 65,000 units There were no efficiency variances. There were no fixed S&A spending variances. We spent the same as budgeted. There was $50,000 F in material, labour and variable overhead spending variances. There was a $20,000 unfavourable fixed overhead spending variance. Fixed overhead denominator variance must be calculated. 7 user to REQUIRED: Make an excel spreadsheet, using cell references wherever possible, t' above numbers and... 1) Compute net income using Absorption costing. 2) Compute net income using Variable (direct) costing. 3) Reconcile the difference in net income.