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: 1 Chapter 6: 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. 10 Variable manufacturing overhead Fixed manufacturing overhead per year 11 Selling and administrative expenses: 12 Variable per unit sold: 135 Fixed per year 14 15 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year $ 376 $ 143 $ 72 $ 36 $ 153,600 $ 2 $ 64,000 Year 1 Year 21 0 3,200 2,400 2,700 2,700 Required information (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 $180,000 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 4,800 units. (a) Would this change result in a bonus being paid to the CEO? Yes CONO (b) What is the net operating income (loss) in Year 2 under absorption costing? Required information (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? (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 2,700 units per year? Yes No Paste BIU A Alignment Number Conditional Format as Cell Formatting Table Styles Cells Editing Clipboard Font Styles ES C D 1 Addison, Inc. makes a single product, an indoor fireplace. Data for last year is as follows: 2 3 Selling price per fireplace $420 4 Manufacturing costs: 5 Variable per unit produced: 6 Direct materials $135 7 Direct labor $43 8 9 Fixed manufacturing overhead per year Variable manufacturing overhead 10 Selling and administrative expenses: 11 Variable per unit sold 12 Fixed per year 13 14 Units in beginning inventory 15 Units produced during the year 16 Units sold during the year 17 18 Use the data to answer the following. 19 20 1. Assume the company uses variable costing: 21 22 Compute the unit product cost for one fireplace 23 24 Prepare a contribution margin income statement for the year Sheet1 215 $37 $210,000 $45 $190,000 0 5,000 4,500 Clipboard Font ES X fo A Formatting Table Styles Styles B 24 Prepare a contribution margin income statement for the year 25 26 Sales 27 Variable expenses: 28 Variable cost of goods sold 29 Variable selling and administrative expenses 30 Contribution margin 31 Fixed expenses: 32 Fixed manufacturing overhead S 33 Fixed selling and administrative expenses 34 Net operating income 35 36 Compute the number of fireplaces required to breakeven 37 38 2. Assume the company uses absorption costing: 39 40 Compute the unit product cost for one fireplace 41 42 Prepare an income statement for the year 43 44 Sales 45 Cost of goods sold 46 Gross margin 47 Selling and administrative expenses 48 Net operating income READY Attempt(s) Sheet1 C D $ 1,890,000 967,500 202,500 1,170,000 720,000 210,000 190,000 400,000 $ 320,000 2,500 $ 257 $ 1,890,000 1,156,500 733,500 392,500 $ 341,000 4 E 100% Hint