Q 8.67: Reno Rehab Co. specializes in building prefabricated decks that just snap together to form a sturdy, long- lasting structure. A deck that is 3.5 square metres sells for $8,000. During their first year of operations, they produced 100 units and sold 97 based on the following costs: Direct materials Direct labour Variable manufacturng costs Fixed manufacturing costs Per Unit $ 1,325 2,175 695 915 $ 5,110 In Year 2, they produced 94 units, and again sold 97. There was no change in the costs. What was the difference between cost of goods sold in Year 1 and in Year 2, assuming Reno uses the variable approach to product costing? A COGS will be higher in Year 1 because more units were produced. B COGS would be higher in Year 2 because decreased levels of production will increase the per unit product price, when fixed manufacturing costs are included. COGS would be the same in Year 2 as in Year 1 because variable product cost per unit is not affected by changes in the volume of production. D COGS in Year 2 would be $2,745 more than in year one because of deferred fixed manufacturing costs that would be expensed