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Required Information The Chapter 6 Form worksheet is to be used to create your own worksheet version of the Review Problem in the text. 2.
Required Information The Chapter 6 Form worksheet is to be used to create your own worksheet version of the Review Problem in the text. 2. Change all of the numbers in the data area of your worksheet so that it looks like this: B S 350 A 1 Chapter 6: Applying Excel 2 3 Data 4 Selling price per unit 5 Manufacturing costs: 6 Variable per unit produced: 7 Direct materials Direct labor 8 Variable manufacturing overhead 9 Fixed manufacturing overhead per year 10 Seling and administrative expenses 11 Variable per unit sold 12 S S S 145 85 22 105,000 S S 9 Fixed per year S 42.000 13 14 Year 2 15 Units in beginning inventory 16 Units produced during the year 17 Units sold during the year 18 Year 1 0 2,500 2,200 2.100 2.200 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.) 2 units were left over from the previous year. The cost of goods sold is always less under variable costing than under absorption costing. 1 Sales exceeded production so some of the fixed manufacturing overead 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 $140.000 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 4.200 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? (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 2.200 units per year? Yes O No
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