Question 4 - Frederick and Sons (8 marks) Please leave column A blank so I can use it for marking. 0 You work for Frederick and Sons Company (FSC) as the VP Finance. FSC's CEO (your boss), I.M. Confewzed, is currently sitting in your office with the financial statements that you prepared for 2019 and 2020 and he says," I don't understand. Sales in 2020 were higher than they were in 2019 and our costs stayed the same. Why did our profits go down?" I.M. Confewzed was correct in that both variable costs per unit and total fixed manufacturing costs for 2019 and 2020 remained constant as follows: Variable costs per unit 18.00 Total fixed manufacturing costs |$ 2,000,000 There was no beginning inventory at the start of 2019. Average selling price per unit was constant for 2019 and 2020 at $50 per unit. Selling and administrative expenses were all fixed at $100,000 each year. Units produced and sold each year were as follows: 2019 2020 Units produced 107,500 57,500 Units sold 77,000 88,000 Here are the statements you prepared (that your boss is looking at): 2019 2020 Sales $ 3,850,000 $ 4,400,000 Cost of goods sold: Beginning inventory 1,116,442 Variable manufacturing costs 1,935,000 1,035,000 Fixed manufacturing costs 2,000,000 2,000,000 Total available 3,935,000 4,151,442 Ending inventory 1,116,442 Cost of goods sold 2,818,558 4,151,442 Operating income 1,031,442 248,558 Warning: Have you entered your student # into the yellow highlighted cell in the cover tab? Otherwise you may be working with th1. What costing method did you use to prepare your financial statements (absorption, variable or throughput costing)? (2 marks) Costing method used: SHOW ROUGH WORK HERE ( correct guess only gets you 1 of the 2 marks): 2. Explain to your boss why that method is not the best option in this situation and provide a revised income statement for FSC (using the method you recommend). (6 marks) Show calculations/work here - make sure you summarize so I know what your final analysis is