Headsmart, a three-year-old company, has been producing and selling a single type of bicycle helmet. Headsmart uses standard costing. After reviewing the statements of comprehensive income for the first three years, Stuart Weil, president of Headsmart, commented, "I was told by our accountantsand in fact, I have memorizedthat our breakeven volume is 50,000 units. I was happy that we reached that sales goal in each of our first two years. But, here's the strange thing in our first year, we sold 50,000 units and indeed we broke even. Then, in our second year, we sold the same volume and had a positive operating income. I didn't complain, of course... but here's the bad part. In our third year, we sold 20% more helmets, but our operating income fell by more than 80% relative to the second year! We didn't change our selling price or cost structure over the past three years and have no price, efficiency, or rate variances so what's going on?!" 5 Click the icon to view the absorption costing statements of comprehensive income for the three years.) Required - Data Table Absorption Costing 2017 2018 2019 Sales (units) 50,000 50,000 60,000 Revenues $ 2,100,000 $2,100,000 $ 2,520,000 Cost of goods sold: Beginning inventory 0 0 380,000 Production 1,900,000 2,280,000 1,900,000 Available for sale 1,900,000 2,280,000 2,280,000 Deduct ending inventory 0 0 (380,000) 0 (240,000) 0 Adjustment for production-volume variance 1,900,000 1,660,000 2,280,000 Cost of goods sold Gross margin 200.000 440,000 240,000 Selling and administrative expenses (all fixed) 200,000 200.000 200,000 $ 0 $ 240,000 40,000 Operating income Beginning inventory 0 0 10,000 Production (units) 50,000 60,000 50,000 Sales (units) 50,000 50,000 60,000 Ending inventory 10,000 0 Variable manufacturing cost per unit $ $ 14 $ 14 $ 14 Fixed manufacturing overhead costs $ 1,200,000 $ 1,200,000 $ 1,200,000 Fixed manuf. costs allocated per unit produced $ 24 $ 24 $ 24 Print Done 3. Prepare a variable-costing-based statement of comprehensive income for each year. Explain the variation in variable costing operating income for each year based on contribution margin per unit and sales volume. 4. Reconcile the operating incomes under variable costing and absorption costing for each year, and use this information to explain to Stuart Weil the positive operating income in 2018 and the drop in operating income in 2019