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 1 1,000 units 1,400 units Year 2 1,200 units 1,000 units Sales Production Costs Direct manufacturing costs Overhead (all fixed) Variable SG&A Fixed SG&A $700 $700 $1,000 $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 = Chegg Study Textbook Solutions Expert Q&A Study Pack Practice / 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. 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 1 1,000 units 1,400 units Year 2 1,200 units 1,000 units Sales Production Costs Direct manufacturing costs Overhead (all fixed) Variable SG&A Fixed SG&A $700 $700 $1,000 $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 = Chegg Study Textbook Solutions Expert Q&A Study Pack Practice / 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