Question: The Excel worksheet form that appears below
The Excel worksheet form that appears below is to be used to recreate portions of Review Problem 1 relating to Dexter Corporation. Download the workbook containing this form from Connect, where you will also receive instructions about how to use this worksheet form.
You should proceed to the requirements below only after completing your worksheet. The
LIFO inventory flow assumption is used throughout this problem.
Required:
1. 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
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.
3. At the end of Year 1, the company’s board of directors set a target for Year 2 of net operating income of $500,000 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 50,000 units. Would this change result in a bonus being paid to the CEO? Do you think this change would be in the best interests of the company? What is likely to happen in Year 3 to the absorption costing net operating income if sales remain constant at 12,000 units per year?
Transcribed Image Text:
1 Chapter Applying Excel 3 Data 4 Seling prce per unit 5 Marufacturing costs 6 Variable per unit produced Drect materials Direct laber 9 Varable marutacturing oerhead Fined mantactuing avertead per year 11 Seling and adninistrative esperaes 12 Varable per unt seld 13 Fined per year $11 53 5120,000 54 S70,000 15 18 Unita in begiming inertory 17 Unts preduced during the yew 13 Unts sold during the year Year 1 Year 2 10.000 B,000 6.000 8.000 20 Enter a formue into each of the cels marked wth a ? beloe 21 Rerviem Problem 1: Contresting Variable and Abserption Costing 23 Compute he Ending kreentory 24 25 Unts in begining inentory 26 Units produced duing the year 27 Unts sold drng the year 28 Unts in endng inventary Year 1 Year 2 23 30 Compute he Absorption Cosring Unit Product Cost 31 22 Direct materials 33 Direct labor 34 Variable manufacturing ovehead 35 Paed manutacturing evertead Year 1 Yaar 2 35 Absorption cesting unt product cost 37 38 Construct the Abopon Costing ncome Statement 39 40 Sales 41 Cost of geeds seld 42 Gros margin 43 Seling and admnistrative epernes 44 Net aperating inceme Year 1 Year 2 46 Compute he Varlable Costing Uinit Product Cost Year 1 Yaar 2 41 Direct materials 49 Drect lebor s0 Variable manufacturing ovetead 51 Varisble costing uit product cont 52 33 Conatruct the Variable Coating ncome Statement 54 55 Sales 56 Variable pens 57 Varable cost ef goods sold 53 Variable seling and adinitatie exper 59 Contrbution magin Fied enpenses 41 Fiaed manuactuning averhead 62 Fied selng and adminstitive epenses 43 Net apeting income Year 1 Year 2 64 .Chanter form edn Oeoterom Chapter Data Selling price per unit. $75 Manufacturing costs: Variable per unit produced:. Direct materials $12 Direct labor..... Variable manufacturing overhead Fixed manufacturing overhead per year... Selling and administrative expenses: Variable per unit sold . $5 $7 $150,000 $1 $60,000 Fixed per year .... Year 1 Year 2 Units in beginning inventory Units produced during the year Units sold during the year .... 15,000 10,000 12,000 12,000 %24
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