Question 3 Tenco Lid manufactures solar panels. The current maximum capacity is 200,000 panels. The fixed production overheads were allocated based on the maximum capacity. The Statement of Profit or Loss for the year ended 31 December 20X1 of Tenco Lid are as follows: S'000 Sales (120,000 units at $30 per unit) 3.600 Less: Cost of sales Variable (120k x $14) 1.680 Fixed 1.000 2.680 Gross profit 920 Fixed selling and administration costs 1.210 Loss (290) There was no opening or closing inventory for the year 20XI. The Chief Executive Officer (CEO) resigned shortly after the results were announced and the company appointed a new CEO, Mr Sooper. The terms of his appointment include a base salary of $300,000 per annum plus a 40% bonus based on the accounting profits for every full year(before the bonus payment). In the past, the CEOs remuneration were fixed with no variable bonuses. In the first year, that is: for the year ended 31 December 20X2, Mr Sooper, the new CEO, achieved the following: Increased sales by 20% over the previous year. Increased production output to 190,000 units. Selling price and costs remained unchanged except for fixed marketing costs of $200,000. There were no acquisition of property, plant and equipment. Required: (a) Prepare the Statement of Profit or Loss for the year ended 31 December 20X2 using: (1) Absorption costing approach. (3 marks) (ii) Variable costing approach. (3 marks) (b) Calculate the bonus payable (if any) and total remuneration of Mr Sooper, the new Chief Executive Officer based on: (i) The accounting profit reported for the year 20X2. (2 marks) (ii) The variable costing profit for the year 20X2