A B C D E F G 1 Chapter 8: Applying Excel 2 3 Data 4 Selling price per unit 5 Manufacturing costs: 6 Variable per unit produced: 7 Direct materials 8 Direct labor 9 12 13 Variable manufacturing overhead 10 Fixed manufacturing overhead per year 11 Selling and administrative expenses: Variable per unit sold Fixed per year 14 15 16 Units in beginning inventory 17 Units produced during the year 18 Units sold Sting the year 19 $50 $11 $6 $3 $1,20,000 $4 $70,000 Year 1 Year 2 0 10,000 6,000 8,000 8,000 20 Enter a formula into each of the cells marked with a ? below 21 Review Problem 1: Contrasting Variable and Absorption Costing 22 23 Compute the Ending Inventory 24 25 Units in beginning inventory 26 Units produced during the year 27 Units sold during the year 28 Units in ending inventory 29 30 Compute the Absorption Costing Unit Product Cost 31 32 Direct materials Year 1 Year 2 0 ? ? ? ? ? ? ? Year 1 Year 2 ? ? ? ? ? ? ? ? ? 33 Direct labor 34 Variable manufacturing overhead 35 Fixed manufacturing overhead 36 Absorption costing unit product cost 37 38 Construct the Absorption Costing Income Statement 39 40 Sales 41 Cost of goods sold 42 Gross margin 43 Selling and administrative expenses 44 Net operating income 45 46 Compute the Variable Costing Unit Product Cost 47 48 Direct materials 49 Direct labor 50 Variable manufacturing overhead 51 Variable costing unit product cost 52 53 Construct the Variable Costing Income Statement 54 Year 1 Year 2 ? ? ? ? ? 2 ? ? ? ? Year 1 Year 2 ? ? 2 ? ? 53 Construct the Variable Costing Income Statement 54 55 Sales 56 Variable expenses: Year 1 Year 2 ? ? 57 Variable cost of goods sold ? 58 Variable selling and administrative expenses ? ? 59 Contribution margin ? ? 60 Fixed expenses: 61 Fixed manufacturing overhead ? ? 62 63 Fixed selling and administrative expenses Net operating income ? ? ? ? 7 ? 64 65 66 67 68 69 70 5 Chapter 8: Applying Excel: Excel Worksheet (Part 1 of 2) (Algo) Download the Applying Excel form and enter formulas in all cells that contain question marks. For example, in cell B26 enter the formula "= B17". After entering formulas in all of the cells that contained 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 cost 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 =IF(C26 Chapter 8: Applying Excel: Exercise (Part 2 of 2) (Algo) 2. Change all of the numbers in the data area of your worksheet so that it looks like this: A 1 Chapter 8: Applying Excel B C 2 3 Data 4 Selling price per unit $ 169 415 5 Manufacturing costs: 6 Variable per unit produced: 7 Direct materials $ 153 8 Direct labor $ 80 9 Variable manufacturing overhead $ 33 10 Fixed manufacturing overhead per year $ 128,800 11 Selling and administrative expenses: 12 Variable per unit sold 13 14 15 34 Fixed per year $ 4 $ 69,000 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year Year 1 Year 2 0 2,800 2,300 2,500 2,500 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.) 3. 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. 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 $220,000 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? (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 2,500 units per year? Yes No S < Prev 4 of 4 Next