Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant Number 7, has just reviewed a draft of his year-end fancial statements Howard syre bonus 11.5% of the plant's operating income before tox. The year-end Income statement provided by the plants controller was disappointing to say the least. After the numbers. How demanded that his controller go back and work the numbers again. Howard 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 1 Click the loon to view additional data) Read the requirements Requirement 1. Show numerically how operating income would improve by $280.000 by classifying the preceding costs as product costs instead of periode Begin by determining the formula to compute how the controller was able to improve operating income, the enter the propriate amounts and compute the craincoating come Warehousing costs as period costs Warehousing costs as product costs Increase in operating income Garden Scapes Manufacturing classifies all costs directly related to the manutacturing of its product as product costs. These costs are inventored and later expensed as costs of goods sold when the product is sold. Al other expenses, including finished goods warehousing costs of $3,640,000, are classified as period expenses. Howard had suggested that warehousing costs be included as product costs because they are definitely related to our product. The company produced 200.000 units during the period and sold 240,000 units As the controller reworked the numbers he discovered that the included warehousing costs as product costs, he could improve operating income by $280,000. He was also sure these new numbers would make Howard happy 1. 2. 3. Show numerically how operating income would improve by $280,000 just by classifying the preceding costs as product costs instead of period expenses. Is Howard correct in his justification that these costs are definitely related to our product"? By how much will Howard profit personally if the controller makes the adjustments in requirement 1? What should the plant controller do? 4