or example, In cell 826 enter the formula "=B17. tained question marks, verify that the dollar amounts match the numbers in Review Problem 1 The LIFO inventory flow assumption is used throughout the problem. Check your worksheet by changing the units sold in the Data to 6,000 for Year 2. The cast of goods sold under absorption costing for Year 2 should now be $240,000. If it isn't, check cell C41. The formula in this cell should be the loss i Year 2 is $34.000 .es eh Gnd the cre n uuD that md sing should be $(34,000) for Year 2. That Chapter 6: Applying Excel Data $50 Selling price per unit Manufacturing costs: Variable per unit produced: $11 Direct materials Direct labor $6 $3 Variable manufacturing overhead Fixed manufacturing overhead per year Selling and admin istrative expenses: Variable per unit sold Fixed per year $120,000 $4 $70,000 Year 1 Year 2 Units in beginning inventory Units produced during the year Units sold during the year 10,000 6,000 8,000 8,000 Enter a formula into each of the cells marked with a ? below Review Problem 1: Contrasting Variable and Absorption Costing Compute the Ending Inventory Year 1 Year 2 |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 Year 2 Year 1 Direct materials Direct labor ? Variable manufacturing overhead ? ? Fixed manufacturing overhead |Absorption costing unit product cost ? ? ? Construct the Absorption Costing Income Statement Year 1 Year 2 Sales Cost of goods sold Gross margin Selling and admin istrative expenses ? ? ? ? Net operating income ? ? Compute the Variable Costing Unit Product Cost Year 1 Year 2 Direct materials ? Direct labor ? ? Variable manufacturing overhead Variable costing unit product cost ? ? Construct the Variable Costing Income Statement Year 1 Year 2 Sales ? ? Variable expenses: Variable cost of goods sold Variable selling and admin istrative expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Net operating income ? ? ? ? ? ? ? . 2. Change all of the numbers in the data area of your worksheet so that it looks like this A B C 1 Chapter 6: Applying Excel 2 Data 3 4 Selling price per unit 5 Manufacturing costs 320 Variable per unit produced: Direct materials 137 7 Direct labor Variable manufacturing overhead S 56 8 27 10 Fixed manufacturing overhead per year 11 Selling and administrative expenses: Variable per unit sold 190,400 $ 12 7 $ 81,000 Fixed per year 13 14 | 15 Year 1 Year 2 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year 0 2,800 3,000 3,400 3,000 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? (c) What 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 $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 5,600 units. (a) Would this change result in a bonus being paid to the CEO? OYes ONo (b) What is the net operating income (loss) in Year 2 under absorption costing? 2. Change all of the numbers in the data area of your worksheet so that it looks like this A 1 |Chapter 6: Applying Excel 2 3 Data 4 Selling price per unit 5 Manufacturing costs: 346 Variable per unit produced: Direct materials 131 7 60 Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year 11 Selling and administrative expenses Variable per unit sold 9 29 $ 183,600 8 $93,000 Fixed per year Year 2 Year 1 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year 0 3,400 2,700 2,900 2,900 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? E6E E 8 o| 0 N a|01 Aw N H (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 $150,000 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? O Yes O No (b) What is the net operating income (loss) in Year 2 under absorption costing