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? $($Loss amounts should be indicated with a minus sign.$)($b$)$ What is the net operating income $($loss$)$ in Year $2$ under absorption costing? $($Loss amounts should be indicated with a minus sign.$)($c$)$ What is the net operating income $($loss$)$ in Year $1$ under variable costing? $($Loss amounts should be indicated with a minus sign.$)($d$)$ What is the net operating income $($loss$)$ in Year $2$ under variable costing? $($Loss amounts should be indicated with a minus sign.$)($e$)$ The net operating income $($loss$)$ under absorption costing is less than the net operating income $($loss$)$ under variable costing in Year $2$ because:

$-$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 $3.$

Make a note of the absorption costing net operating income $($loss$)$ in Year $2.$

At the end of Year $1,$ the company$$s board of directors set a target for Year $2$ of net operating income of $$200,000$ 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 $5,400$ units.

$($a$)$ Would this change result in a bonus being paid to the CEO? $($b$)$ What is the net operating income $($loss$)$ in Year $2$ under absorption costing? $($Loss amounts should be indicated with a minus sign.$)$