Chapter 7: Applying Excel: Exercise 2. Change all of the numbers in the data area of your worksheet so that it looks like this: B 1 2 A Chapter 7: Applying Excel 3 4 $ 266 5 6 106 Data Selling price per unit Manufacturing costs: Variable per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable per unit sold Fixed per year 53 8 $ $ $ $ 36 9 114.400 10 7 11 12 13 53,000 Year 1 Year 2 0 14 15 Units in beginning inventory 16 Units produced during the year 17 Units sold during the year 18 2,600 2.300 2 200 2.300 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 (oss) 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. 2 The cost of goods sold is always less under variable costing than under absorption costing. 2 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 $30,000 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 4,400 units. (a) Would this change result in a bonus being paid to the CEO? O Yes O NO (b) What is the net operating income (loss) in Year 2 under absorption costing? (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 2,300 units per year? O Yes O No