Amanjeet Chinmayi left her job as the production manager of a medium-sized firm two years ago to join a new firm that was manufacturing a revolutionary type of fitness equipment. Amanjeet was made the general manager at the start of operations, and the firm seemed to be doing extremely well. The president was extremely pleased with the company's first-year performance and, at the beginning of the second year, promised Amanjeet a $21,000 bonus if the company's net income were to increase by 25% in year 2. During year 2, Amanjeet sold 25% more units than she had in year 1 and was so confident that she would receive her bonus that she bought non-refundable airline tickets to Europe for her husband Leo, her three sons, and herself. At the end of year 2, Amanjeet received the income statement, and it showed that the company's income had decreased from year 1 even though it had sold considerably more units. Amanjeet did not get along very well with the accountant and felt that he had deliberately distorted the financial statements for year 2. Amanjeet received the following reports: Year 2 Year 1 6,100 4,000 $490 2,940 5,040 $490 Production (in units) Sales (in units) Unit selling price Unit costs Variable manufacturing Variable selling Fixed manufacturing Fixed selling 310 310 19 19 183,000 100,000 205,800 138,000 $2,469,600 1,831,200 Income Statement-(FIFO) Sales $1,960,000 Cost of goods sold 1,360,000 Gross margin 600,000 Selling expenses 176,000 Net income $424,000 638,400 233,760 $404,640 Variable-Costing Income Statement Year 1 Year 2 Sales in units 5600 7000 Add Sales : For years 1 and 2, reconcile the differences between the net income as determined in the income statements you have prepared in part (a) and the income statements prepared by the accountant. Reconciliation Year 1 Year 2 Variable-costing net income Fixed MOH deferred in ending inventory Fixed MOH released from beginning inventory Absorption-costing net income