-Navient!Customers Wells Farg enards HSign-on. more units it can sell. Jan: Nope, the marketing people don't do a thing, We just build inventories and that does the trick. Required: in all of the forthcoming questions, assume that the predetermined overhead rate under the traditional method is $25 per unit, and under the new method it is $20 per unit. Also, assume that under the traditional method any underapplied or overapplied overhead is taken directly to the income statement as an adjustment to Cost of Goods Sold. 1. Suppose actual production is 80,000 units. Compute the net operating incomes that would be realized under the traditional and new methods if actual sales are 75.000 units and everything else turns out as expected. 2. How many units would have to be produced under each of the methods in order to realize the budgeted net operating income of $210,000 if actual sales are 75,000 units and everything else tuns out as expected? 3. What effect does the new method based on capacity have on the volatility of net operating income? 4. Will the "hat trick" b e easier or harder to perform if the new method based on capacity is used? 5. Do you think the "hat trick" is ethical