Chapter 6: Applying Excel Date $346 $133 Selling price per unit Manufacturing costs: Variable per unit produced: Direct materials Direct labor Variable manufacturing overhead Fored manufacturing overhead per year Selling and administrative expenses: Variable per unit sold Fored per year $72 $34 $144,000 $80,000 Year 1 Year 2 Units in beginning inventory Units produced during the year Units sold during the year 3.000 2.500 Enter a formula into each of the cells marked with a 7 below Review Problem 1: Contrasting Variable and Absorption Costing Compute the Ending Inventory Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory Compute the Absorption Costing Unit Product Cost Direct materials Direct labor Variable manufacturing overhead Freed manufacturing overhead Absorption costing unit product cost Year 2 Construct the Absorption Costing Income Statement Year 1 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income + Compute the Variable Costing Unit Product Cost Year 1 Direct materiale Direct labor Variable manufacturing overhead Variable costing unit product cost Construct the Variable Costing Income Statement Yaar Year 2 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expenses Contribution margin Fixed expenses Fixed manufacturing overhead Fixed selling and administrative expenses Net operating income 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? (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 feed manufacturing overhead of the period was released from inventories under absorption costing Make a note of the absorption costing net operating income foss) 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 $90,000 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 4,800 units. (a) Would this change result in a bonus being paid to the CEO? Yes ONO b) What is the net operating income foss) in Year 2 under absorption costing
