Please solve the following problem: John Stevens has a Ice Cream shop in Redlands, California. He produced 10,000 packages of Ice Cream and sold 8,000 packages at $10 each this year. Detail of his costs is: Variable manufacturing costs per package are: Direct Material Direct Labor Variable mfg. overhead Variable selling (shipping & handling) cost $1 $2 $0.75 $.50 Fixed Manufacturing Costs are: Rent of manufacturing location Insurance $2,000 $ 500 Fix Selling costs $1,000 Required: I. . A1. A2. A3. B1. B2. B3. B4 C1 . Calculate product cost per unit under absorption costing Prepare Income statement under absorption costing. Calculate cost of ending inventory under absorption costing Calculate product cost per unit under variable (direct) costing Prepare Income statement under variable (direct) costing. Calculate cost of ending inventory under variable (direct) costing. Prepare a statement to reconcile NI under directo Nl under absorption costing. Calculate total quantity at break-even-point. Subscript Calculate sales at break-even-point. Calculate margin of safety both in quantity and in $ sales. Calculate degree of leverage for this firm's operation. C2 C3 C4 . II. John Steven is considering automating his Ice Cream production. To do so, his production machinery depreciation would be $4,500/year and he can save $1.25/unit on direct labor. Under this situation, do the followings: A1 Calculate product cost per unit under absorption costing A2. Prepare Income statement under absorption costing. A3 Calculate cost of ending inventory under absorption costing Calculate product cost per unit under variable (direct) costing B2. Prepare Income statement under variable (direct) costing. Calculate cost of ending inventory under variable (direct) costing. Prepare a statement to reconcile Ni under direct costing to Nl under absorption costing. C1. Calculate total quantity at break-even-point. C2 Calculate Ssales at break-even-point. B1. . . B3. B4 III. D1. Under automation (information #Il above), calculate the followings: How many units John should sell to get the same net income that he was achieving under labor oriented production (information #1 above)? How many units John should sell to make the same profit as he was making under Situation #I? What would be the total sales to make the same profit as he was making under Situation #I? D2. D3. E1. IV. Assuming the same information under #1 above (laber oriented production) Jack Brown, John's neighbor, who has a small grocery store next to John's shop quietly, approached him and offer to purchase 2000 packages from John at $2.80 per package. Assuming no shipping & handling is needed. Juoso and this low price does not have any impact on his regular selling price of $10. Please advise john whether he should accept the offer or reject it. Provide detail support for your suggestion. Despite his desire of selling at this low price for this special offer, how much John's net income will increase or decrease if he accepts the offer. E2