Question 3c)

3) TrueBeat's management will need to produce 4,000 units in Years 2 and 3 (to meet relevant range) and 6,000 units in Year 4. However, they anticipate selling only 3,000 units in Year 2 but 5,000 units in Years 3 and 6,000 units in Year 4. They will have to carry inventory produced in Year 2 until it is sold in Year 3. Note: Net Operating Income, or NOI, for this course is essentially Income before interest or tax expense and represents the operationally controlled components of Net Income. a) Using variable costing and contribution margin income statement format, prepare predictive income statements for Years 2, 3 and 4 below. Sales revenue Variable production costs Variable S&A expenses Contribution Margin Fixed Overhead Fixed S&A expenses Net Operating Income TrueBeat Income Statement (Variable Costing) For Years ending December 31 Year 2 Year 3 1548000 2,580.000 56700D 945. DOO 274500 62.500 943. DO 1.572.500 198.00 198.000 275.00 275.000 470.500 1.099,500 Year 4 3.090.000 1.134.000 75.DDD L887,ODD 19R ODD 275.000 1.414.000 b) Using absorption costing, prepare an absorption costing income statements for TrueBeat for Years 2, 3 and 4. Sales revenue Cost of Goods Sold Gross Margin S&A expenses Net Operating Income TrueBeat Income Statement(Absorption Costing) For Years ending December 31 Year 2 Year 3 1.5UR0DD 2.580. DOO 715CMD N192150D 92.2.500 0.387.500 312.500 337,500 520.000 1.050.000 Year 4 2.1960DD 1,3372.000 1.764.DDD 350.000 11.DE c) Do you think TrueBeat's decision to maintain drum sets inventory from year 2 until they are sold in year 3 was a good decision? Use complete sentences and 30 to 50 words in your