1. The PTI Company sells its product at $3.00 per unit. PTI uses a FIFO costing system, and a new burden rate for allocating overhead is determined each year by dividing the overhead by units produced. The following information pertains to the first two years of operations: Year 2 1,200 units 1,000 units Year 1 Sales 1,000 units Production | 1,400 units Costs Direct manufacturing costs $700 Overhead (all fixed) $700 Variable SG&A $1,000 Fixed SG&A $400 $500 $700 $1,200 $400 a. For each year, calculate income using absorption costing. b. Some firms use variable costing instead of absorption costing. Under variable costing, all fixed costs - both manufacturing and SG&A - are reported as expenses in the period in which they occur. For each year, calculate income using variable costing. c. Compare your income calculations across the two costing approaches. Are they different? If so, why? d. In class, we discussed why evaluating firm managers using absorption costing may encourage them to engage in dysfunctional behaviors. That said, are there circumstances in which you would recommend evaluating managers using absorption costing information? List and describe at least 2 such circumstances