Answer in detail

Oscar, the new plant manager of Garden Light Manufacturing Plant Number 5, has just reviewed a draft of his year-end financial statements. Oscar receives a year-end bonus of 11.5% of the plants operating income before tax. The year-end income statement provided by the plants controller was disappointing to say the least. After reviewing the numbers, Oscar demanded that his controller go back and work the numbers again. Oscar insisted that if he didnt see a better operating income number the next time around he would be forced to look for a new controller.Garden Light Manufacturing classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished-goods warehousing costs of $3,640,000, are classified as period expenses. Oscar had suggested that warehousing costs be included as product costs because they are definitely related to our product. The company produced 260,000 units during the period and sold 240,000 units.As the controller reworked the numbers, he discovered that if he included warehousing costs as product costs, he could improve operating income by $280,000. He was also sure these new numbers would make Oscar happy.Required:

2.Describe the appropriate action should the controller take in this situation.(15 marks)