of on Howilt, the new plant manager of Old Tre Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Howett receives a et. year-end bonus of 6.5% of the plants operating income before tax. The year and income statement provided by the plant's controller was disappointing to say the least. After reviewing the numbers, Howit demanded that his controlor go back and work the numbers again. Howitt insisted that it he didn't see a better operating An income number the next time wound he would be forced to look for a new controller ere Click the icon to view editional data) Read the requirements or .nu FO - Requirement 1. Show numerically how operating income would improve by $330,000 just by classying the preceding costs as product costs instead of period expenses is Begin by determining the formula to compute how the controller was able to improve operating income, then enter the appropriate amounts and compute the increase in operating income fa Increase in operating income an Requirement 2. Is Howitt correct in his justification that these costs wo definitely related to our p product of th The controller correct in his justification with respect to classifying costs as product or period costs this determination is made by Research and development, as well as all costs related to warehousing and distribution of goods, should be classified as and be Requirement 3. By how much wil Howitt profit personally if the controller makes the adjustments in requirement 17 of Jason Howit will profit personally by if the controler makes the adjustments. Requirement 4. What should the plant controller do? ccd 4 More info - X pd of period pute the Old Tree Manufacturing classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished goods warehousing costs of $3,630,000, are classified as period expenses. Howitt had suggested that warehousing costs be included as product costs because they are "definitely related to our product. The company produced 220,000 units during the period and sold 200,000 units. As the controller reworked the numbers he discovered that if he included warehousing costs as product costs, he could improve operating income by $330,000. He was also sure these new numbers would make Howitt happy oods, should Print Done