Below are two proposals. Evaluate each proposal independently and select the best course of action. (Hint: compute the net income for each proposal). To eam credit, you must show your work. Proposal 1: The marketing team suggests improving the quality of materials used in production. This will increase the variable cost by $10 per unit. To help cover the increased materials costs, the team proposes to increase the selling price by $4. With an additional $18,000 in advertising, the marketing department thinks that sales could increase to 15,000 units. Proposal 2: Marketing suggests decreasing the unit selling price by 20%. For $7.200, it will run a Best-Deal-in-Town advertising campaign. The manager thinks that with this approach the sales volume will double. What should Sill Inc. do? Should it keep doing what it is doing, or should it adopt one of the proposals? Company A hired John during January 2019 to manage its commercial products division. As part of his employment contract, John is guaranteed $1,000 bonus for every 1% increase in division's operating income for the current year over that of the prior year. In prior years, the commercial products division employed just-in-time inventory practices; it produced units only as they were needed and had no inventory on hand when John started. John directed his plant managers to run the plants at full capacity. John's reasoning was that, in the past, the company missed out on too many sales opportunities because of inventory shortages. The selling price and variable costs per unit remained the same from 2018 to 2019. Below is the data for 2018 and 2019 Instructions You must show your work. You may not just write the final answers. Explain the concepts and principles you used to come up with your answers. 1. Calculate John's bonus for 2019 based upon the operating income shown above. 2. Recompute the 2018 and 2019 results using variable costing. 3. Calculate John's bonus for 2019 under variable costing. 4. Did John act ethically? What actions should the company take? Below are two proposals. Evaluate each proposal independently and select the best course of action. (Hint: compute the net income for each proposal). To eam credit, you must show your work. Proposal 1: The marketing team suggests improving the quality of materials used in production. This will increase the variable cost by $10 per unit. To help cover the increased materials costs, the team proposes to increase the selling price by $4. With an additional $18,000 in advertising, the marketing department thinks that sales could increase to 15,000 units. Proposal 2: Marketing suggests decreasing the unit selling price by 20%. For $7.200, it will run a Best-Deal-in-Town advertising campaign. The manager thinks that with this approach the sales volume will double. What should Sill Inc. do? Should it keep doing what it is doing, or should it adopt one of the proposals? Company A hired John during January 2019 to manage its commercial products division. As part of his employment contract, John is guaranteed $1,000 bonus for every 1% increase in division's operating income for the current year over that of the prior year. In prior years, the commercial products division employed just-in-time inventory practices; it produced units only as they were needed and had no inventory on hand when John started. John directed his plant managers to run the plants at full capacity. John's reasoning was that, in the past, the company missed out on too many sales opportunities because of inventory shortages. The selling price and variable costs per unit remained the same from 2018 to 2019. Below is the data for 2018 and 2019 Instructions You must show your work. You may not just write the final answers. Explain the concepts and principles you used to come up with your answers. 1. Calculate John's bonus for 2019 based upon the operating income shown above. 2. Recompute the 2018 and 2019 results using variable costing. 3. Calculate John's bonus for 2019 under variable costing. 4. Did John act ethically? What actions should the company take