Replicate the calculations that lead to the cost of goods sold reported in the income statement. How does this income statement group costs? 2. Estimate the income if Phelps were to produce and sell 20,000 gears per year? Produces and sell 25,000 gears per year? How should we group costs to improve our estimate? Ignore sprockets. 3. Phelps is currently operating with significant excess capacity. How is the cost of capacity being accounted for now? How could we change the alloca