i. Recast the absorption costing income statement for 2014 into a variable costing format. Does it appear, as Sanjay Patel contends, that the more the company sells, the more it loses? Explain.

ii. Warren Logan, CFO, has developed assumptions that he believes are reasonable for 2015 and 2016. Using these assumptions, prepare budgeted income statements for 2015 and 2016 using the variable costing method. Are the major investors likely to find forecasted profits encouraging? Explain.

iii. Calculate the following for 2016: a. Unit contribution margin. b. Sales in dollars and units needed to breakeven. c. Margin of safety in units and dollars. d. Degree of operating leverage. Briefly explain and interpret