Production and sales information for the three years are given below: 2018 (units '000) Production (units) Sales (units) 2016 40 40 2017 50 30 40 Prepare the Income Statement using appropriate format to compute the net operating income for each year under the variable costing approach. (5 Marks) ( Explain why net operating income was higher in 2017 than in 2016 under absorption costing, in light of the fact that fewer units were sold in 2017 than in Year 2016 (5 Marks) (0) Explain why the company suffered a loss in 2018 but reported a profit in 2016, although the same number of units was sold in each year. (5 Marks) (iv) Do you AGREE that absorption costing induces more unethical financial reporting practices than variable costing? EXPLAIN with appropriate examples (5 Marks) Page 12 ACCT-3122: Home Assignment 2 (Fall 2019) Question 1 (20 marks) Seeb LLC manufactures and sells a unique machine part. The firm's plant is highly automated with low variable and high fixed manufacturing costs. Operating results on an absorption costing basis were as follows: 704 2016 2017 2018 <............ ......... sales cost of goods sold gross margin selling administrative expenses net operating income additional information about the company is as follows: total variable manufacturing costs dms and overhead per unit omr3 fixed omr400 are applied to units product on basis number produced each vear a new rate computed year uses fifo inventory flow assumption. omr2 sold. omr100 production for three years given below: prepare statement using appropriate format compute under costing approach. marks explain why was higher in than absorption light fact that fewer were suffered loss but reported profit although same year. do you agree induces more unethical financial reporting practices with examples page acct-3122: home assignment question seeb llc manufactures sells unique machine part. firm plant highly automated low high costs. results an>