Question 6 (10 Marks) Mary Tappin, an assistant Vice President at Galaxy Toys, was disturbed to find on her desk a memo from her boss, Gary Resnick, to the controller of the company. The memo appears below: Galaxy Toys Internal Memo Sept 15, 2020 To: Harry Wilson, Controller From: Gary Resnick, Executive Vice President As you know, we won't start recording many sales until October when stores start accepting shipments from us for the Christmas season. Meanwhile, we are producing flat-out and are building up our finished goods inventories so that we will be ready to ship next month. Unfortunately, we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be awful. This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they do not like what they see. Is there any possibility that we could change the classification of some of our period costs to product costs--such as the rent on the finished goods warehouse? Please let me know as soon as possible. The President is pushing for results. Mary did not know what to do about the memo. It was not intended for her, but its contents were alarming. Required: a. Why has Gary Resnick suggested reclassifying some period costs as product costs? b. Why do you think Mary was alarmed about the memo