year. Costs and unit sales are expected to be consistent from last year to the current year. Ba on last years' results, AE expects to sell 10,000 units of each product this year. The plott are priced at $800 and the 3D printers at $1,000. Rachel Merrett, president of the company, is considering how best to motivate her managers. She feels it is fair to provide bonuses once the company's operating income is 5 above the expected operating income. Required: a. Prepare a contribution format income statement for AE using variable costing. b. Prepare an income statement for AE using absorption costing. c. Based on Rachel's approach, what is the operating income level that AE must generate before managers are eligible for bonuses? d. Rachel can specify the use of either the contribution format income statement or the absorption costing income statement in defining the bonus threshold. Which would you recommend she use? Explain why- Part II A few weeks later, Rachel is pondering how she should respond to a request for a bid that has just been brought in by her sales manager. The request comes from an overseas company operating outside of AE's usual market area and is for a one-time shipment of 5,000 customized 3D printers. The overseas company has offered to pay all shipping costs FOB plant. The customized printers would carry the same variable cost as AE's standard product but would require an estimated $100,000 in retooling costs to fulfill the custom specifications. Rachel believes that currently the company has sufficient capacity to handle the additional 5,000 units of output without needing additional equipment or space. The production manager feels it would be possible to build the units, but the plant will be nearing or just over their capacity In considering what price to bid, Rachel wants to first determine the minimum price that she can accept on the order without lowering the company's operating income. The sales manager has suggested adsure of $720/unit based on the following calculations MacBook Air F6 II F7 F8 F9 F10 F11 40)) F12