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: 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

 

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:

 

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.)

 

check all that apply
  • 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 $80,000 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?

 

multiple choice 1

  • 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 2,200 units per year?

 

multiple choice 2
  • Yes
  • No
 
 
 
 
 
 
 
 
 
 
 
A.
1
Chapter 6: Applying Excel
Data
Selling price per unit
329
5.
Manufacturing costs:
Variable per unit produced:
7.
Direct materials
%24
153
8.
Direct labor.
$4
57
9.
Variable manufacturing overhead
27
10
Fixed manufacturing overhead per year
%24
100,800
11 Selling and administrative expenses:
12
Variable per unit sold
8
13
Fixed per year
$45,000
14
15
Year 1
Year 2
16 Units in beginning inventory
17 Units produced during the year
2,400
2,100
18 Units sold during the year
2,200
2,200
%24
%24
%24
%24
%24
2.
3.
4.
6.
Transcribed Image Text:A. 1 Chapter 6: Applying Excel Data Selling price per unit 329 5. Manufacturing costs: Variable per unit produced: 7. Direct materials %24 153 8. Direct labor. $4 57 9. Variable manufacturing overhead 27 10 Fixed manufacturing overhead per year %24 100,800 11 Selling and administrative expenses: 12 Variable per unit sold 8 13 Fixed per year $45,000 14 15 Year 1 Year 2 16 Units in beginning inventory 17 Units produced during the year 2,400 2,100 18 Units sold during the year 2,200 2,200 %24 %24 %24 %24 %24 2. 3. 4. 6.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education