numbers" again. He insisted that if he didn't see a better operating income number the next time around he would be forced to look for a new controller. "definitely related to our product". The company produced $210,000$ units during the period and sold $190,000$ units.

If the controller reworks the numbers and reclassifies the warehouse costs as product costs, how much would operating income improve? Show all calculations.

Is the plant manager correct in saying the warehouse costs should be reclassified because they "definitely relate to our product"? Explain your answers.

How much will the plant manager benefit by this decision? Should the controller reclassify the costs? Explain why or why not.