Question One Chelsea Company produces and sells luxury chocolates. After feeling very confident about the company's recent performance Chelsea is shocked that the financial statements show a loss. Knowing your knowledge of various accounting methods and how they affect the statements Chelsea has asked you for your opinion. The statement prepared by her bookkeeper follows: Chelsea Company Income Statement $250,000 Sales (50,000 boxes of chocolate) Variable Expenses: Variable COGS (DM, DL, VMOH) $137,500 Variable Selling & Admin $ 32,500 170,000 Contribution Margin $ 80,000 Fixed Expenses: Fixed Manufacturing Overhead $65,100 Fixed Selling & Admin $25,000 90,100 Operating Profit (Loss) S (10,100) Additional data for the same period is as follows: Required: Boxes produced 62,000 Variable Cost per Box: Direct Material $1.25 Direct labour $1.00 Variable Manufacturing Overhead $0.50 Variable Selling & Admin 50.65 a) Redo the company's income statement using absorption method. b) Reconcile the absorption and variable operating income figures.