Question

2. Change all of the numbers in the data area of your worksheet so that it...

2. Change all of the numbers in the data area of your worksheet so that it looks like this:

A

B

C

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

Chapter 4: Applying Excel
Data
Selling price per unit $334
Manufacturing costs:
Variable per unit produced:
Direct materials $135
Direct labor $54
Variable manufacturing overhead $26
Fixed manufacturing overhead per year $119,600
Selling and administrative expenses:
Variable per unit sold $4
Fixed per year $58,000
Year 1 Year 2
Units in beginning inventory 0
Units produced during the year 2,600 2,300
Units sold during the year 2,400 2,400

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 4,600 units.

  

(a) Would this change result in a bonus being paid to the CEO?

  • Yes

  • No

(b) What is the net operating income (loss) in Year 2 under absorption costing?

Homework Answers

Answer #1


Answer (a) Yes the CEO will be having bonus after changing data.

Answer (b) Net operating profit in Year 2 will be $ 93200

and after canging data profit will increase to $ 155600

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