The VARCOST2 worksheet is capable of calculating variable and absorption income when unit sales are equal to or less than production. An equally common situation (that this worksheet cannot handle) is when beginning inventory is present and sales volume exceeds production volume. Revise the worksheet Data Section to include:

Beginning inventory in units 15,000

Beginning inventory cost (absorption) $266,875

Beginning inventory cost (variable) $210,000,

Also, change actual production to 70,000. Revise the Answer Section to accommodate this new data. Assume that Anderjak uses the weighted-average costing method for inventory. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Check figure: Absorption income, $670,000.PLEASE SHOW FORMULAS NOT JUST ENDING TOTALS

FORMULA1 B 1 2 VARCOST 3 Variable Costing 4 5 Data Section 6 7 Actual production in units 100,000 8 Sales in units 80,000 9 Sales price per unit $30 10 Variable manufacturing costs per unit $14 11 Variable selling costs per unit $2 12 Fixed manufacturing costs $315,000 13 Fixed selling expenses $100,000 14 15 Answer Section 16 17 Income statement: Absorption costing 18 19 Sales 20 Cost of goods sold: 21 Variable manufacturing costs FORMULA2 22 Fixed manufacturing costs FORMULA3 23 Total goods available for sale $0 24 Less ending inventory FORMULA4 25 Cost of goods sold 26 Gross profit 27 Selling expenses: 28 Fixed selling expenses FORMULA5 29 Variable selling expenses FORMULA6 30 Total selling expenses 31 Operating income 32 33 34 Income statement: Variable costing 35 36 Sales 37 Cost of goods sold: 38 Variable manufacturing costs FORMULA7 39 Less ending inventory FORMULAS 0 $0 0 $0 $0 FORMULAS 0 $0 FORMULAS $0 39 Less ending inventory 40 Variable cost of goods sold 41 Manufacturing margin 42 Variable selling expenses 43 Contribution margin 44 Fixed costs: 45 Fixed manufacturing costs 46 Fixed selling expenses 47 Total fixed costs 48 Operating income FORMULA10 0 0 $0