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Exercise 1 NetStrong Inc. manufactures a device that is used by internet users to boost Wi-Fi signals. The following data relates to 2020: Inventory information: Beginning inventory (units) 1,000 Units produced during 2020 40,000 Units sold during 2020 34,500 Units distributed for promotion 500 Selling price per unit 120 Marketing and administrative expenses: Variable selling and administrative expenses per unit Fixed selling and administrative expenses per year 1,120,000 Manufacturing expenses: Direct materials per unit 30 Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per year 1,280,000 4 14 4 The management is anxious to analyze the profitability of this newly designed booster. Required: a. Prepare the contribution margin income statement, total output format. b. Calculate the operating leverage. c. Compute the break-even point in units and the safety margin. d. Prepare the income statement using absorption costing and the cost of goods sold format. e. Explain the different uses the two cost configurations can have in helping managers and other users of financial information in making decisions