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2. Change all of the numbers in the data area of your worksheet so that it looks like this: A B 1 Chapter 7: Applying Excel 2 3 Data 4 $ 275 5 Selling price per unit Manufacturing costs: Variable per unit produced: 6 7 Direct materials $ 104 8 Direct labor $ 63 9 $ 33 10 $ 113,400 Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable per unit sold 11 12 $ 4 13 Fixed per year $ 58,000 14 15 Year 1 Year 2 0 16 Units in beginning inventory 17 Units produced during the year 18 Units sold during the year 2,700 2,100 2,300 2,300 (b) What is the net operating income (loss) in Year 2 under absorption costing? Answer is complete but not entirely correct. Net operating income 8,700 X (c) What is the net operating income (loss) in Year 1 under variable costing? Answer is complete but not entirely correct. Net operating loss 8,100 X (d) What is the net operating income (loss) in Year 2 under variable costing? X Answer is complete but not entirely correct. Net operating loss $ 8,100 X (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 $40,000 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? Yes No X (b) What is the net operating income (loss) in Year 2 under absorption costing

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