Chapter 6, Problem 2AE

	A	B	C	D	E
1	Chapter 6: Applying Excel
2
3	Data
4	Selling price per unit	$50
5	Manufacturing costs
6	Variable per unit produced
7	Direct materials	$11
8	Direct labour	$6
9	Variable manufacturing overhead	$6
10	Fixed manufacturing overhead per year	$120,000
11	Selling and administrative expenses
12	Variable per unit sold	$4
13	Fixed per year	$70 000
14
15		Year 1	Year 2
16	Units in beginning inventory	0	?
17	Units produced doing the year	10 000	6 000
18	Units sold doing the year	8 000	8 000
19
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		Year 1	Year 2
25	Units in beginning inventory	0	?
26	Units produced doing the year	?	?
27	Units sold doing the year	?	?
28	Units in ending inventory	?	?
29
30	Compute the Absorption Costing Unit Product Cost
31		Year 1	Year 2
32	Direct materials	?	?
33	Direct labour	?	?
34	Variable manufacturing overhead	?	?
35	Fixed manufacturing overhead	?	?
36	Absorption costing unit product cost	?	?
37
38	Construct the Absorption Costing Income Statement
39		Year 1	Year 2
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		Year 1	Year 2
48	Direct materials	?	?
49	Direct labour	?	?
50	Variable manufacturing overhead	?	?
51	Variable costing unit product cost	?	?
52
53	Construct the Variable Costing Income Statement
54		Year 1	Year 2
55	Sales		?		?
56	Variable expenses
57	Variable cost of goods sold		?		?
58	Variable selling and administrative expenses	?	?	?	?
59	Contribution margin		?		?
60	Fixed expenses
61	Fixed manufacturing overhead	?		?
62	Fixed selling and administrative expenses	?	?	?	?
63	Net operating income		?		?

2. Enter the following data from a different company into your worksheet:

Data
Selling price per unit		$75
Manufacturing costs:
Variable per unit produced:
Direct materials		$12
Direct labor		$5
Variable manufacturing overhead		$7
Fixed manufacturing overhead per year		$150,000
Selling and administrative expenses:
Variable per unit sold		$1
Fixed per year		$60,000
		Year 1	Year 2
Units in beginning inventory		0
Units produced during the year		15,000	10,000
Units sold during the year		12,000	12,000

Is the net operating income under variable costing different in Year 1 and Year 2? Why or why not? Explain the relation between the net operating income under absorption costing and variable costing in Year 1. Explain the relation between the net operating income under absorption costing and variable costing in Year 2.