ADA 3 C D Chapter Applying Excel 511 Data Selling priceperunt Variatie punt produced Direct Dract aber Waitlemateuriyala Fredacturing cheal you Selling and the Variable per un sold 3120000 370.000 Year 2 15 Unten begin metry 17 Uits produced during they 18 Using the ye 19 10.000 8.000 21 Review Problem 1: Contrasting Variable and Absorption Cunting 23 Compute the Ending Inventory Yeart Year 2 25 Unitong inventory 25 Units produced during the year 7 27 during the year 7 7 Uiteinandingar 90 Compute the action Cooling Product Com 2 20 Director 34 Variable marching and as manufacturing cread 38 Absorption costing unt product cost 3 Constructe Aber for Costing Income Statement Sales 41 Coat of goods 42 Gossage La Seling and et praticante 46 Compute the Variatie Casting Cour Year 2 49 Direct labor 30 Variable manufacturing overed 51 lecting unt productos Constructible Corting comment Ss Sales S6 Variable expenses Year 2 00 61 dvd Fidelling and 2. Change all of the numbers in the data area of your worksheet so that it looks like this: B Chapter 4: Applying Excel 1 2 3 Data 4 S 300 6 $ 136 8 $ 78 Selling price per unit 5 Manufacturing costs: Variable per unit produced: 7 Direct materials Direct labor 9 Variable manufacturing overhead 10 Fixed manufacturing overhead per year 11 Selling and administrative expenses: 12 Variable per unit sold 13 Fixed per year 14 S 26 S 90,000 S 5 S 40,000 15 Year 1 Year 2 0 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year 1,800 2,500 2,000 2,000 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? RE (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? (e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Units were left over from the previous year. The cost of goods sold is always less under variable costing than under absorption costing. Sales exceeded production so some of the fixed manufacturing overhead of the period was released from inventories 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 company's board of directors set a target for Year 2 of net operating income of $20,000 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 3,600 units. (a) Would this change result in a bonus being paid to the CEO? Yes O No (b) What is the net operating income (loss) in Year 2 under absorption costing? T (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 2,000 units per year? Yes No