1-6 please!

Pat Miranda, the new controller of Vault Hard Drives, Incorporated, has just returned from a seminar on the choice of the activity level in the predetermined overhead rate. Even though the subject did not sound exciting at first, she found that there were some importan ideas presented that should get a hearing at her company. After returning from the seminar, she arranged a meeting with the production.manager, J. Stevens, and the assistant production manager, Marvin Washington. Traditional Approach to Computation of the Predetermined Overthead Rate Estimated total manufocturing overhend cost, $2,132,000 / Estimated total units produced, 82,000 w $26.00 per unit New Approach to Computation of the Predetermined Overhead Rate Using Capacity in the Denominator Estimated total manufacturing overhead cost at capacity, $2,132,000/ Total units at capacity, 100,000 units =$21,32 per unit J.t Whoall I don't think I like the looks of that "Cost of unused capacity, " If that thing ahows up on the incone statement, someone from headquarters is likely to come down here looking for some people to lay off. Marvint I'm worried about sonething else too. What happens when sales are not up to Pat, expectationa? Can we pul1 the "hat triek"? Pat, I'm sorry, I don't understand, Marvin's taiking about something that happens fairly regularly. When sales are down and profits look 11ke they are going to be lower than the president told the oimers they were going to bo, the preaident comes down here and aske us to deliver some more profita. Marvint And we pull them out of our hat. J.t Yoah, we fust inorease production until we get the profita we want. Pat, I still don't understand. You mean you increase salea? Pat. Nope, we increase production. We're the production managers, not the saleri managerm. the trick. Required: In all of the questions below, assume that the predetermined overhead rate under the traditional method is $26 per unit, and under the new capacity-based method it is $21.32 per unit 1. Assume actual sales is 78,000 units and the actual production in units, actual selling price, actual variable manufacturing cost per unit, and actual fixed costs all equal their respective budgeted amounts. Given these assumptions: a. Compute net operating income using the traditional income statement format. b. Compute net operating income using the new income statement format. 2. What effect does the new capacity-based approach have on the volatility of net operating income? 3. Assume that actual sales is 78,000 units and the actual selling price, actual variable manufacturing cost per unit, and actual fixed costs all equal their respective budgeted amounts. Under the traditional approach, how many units would have to be produced to realize net operating income of $188,000 ? 4. Assume that actual sales is 78,000 units and the actual selling price, actual varlable manufacturing cost per unit, and actual fixed costs all equal their respective budgeted amounts. Under the neiy capacity.based approach. how many units would have to be produced to realize net operating income of $188,000 ? 5. Will the "hat trick" be easier or harder to perform if the new capacity-based method is used? 6. Do you think the "hat trick" is ethicai? Assume actual sales is 78,000 units and the actual production in units, actual selling price, actual variable manufac per unit, and actual fixed costs all equal their respective budgeted amounts. Given these assumptions: Compute ne income using the traditional income statement format. Assume actual sales is 78,000 units and the actual production in units, actual selling price, actual variable manufacturing cost per unit, and actual fixed costs all equal their respective budgeted amounts. Given these assumptions: Compute net operating income using the new income statement format