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Sampson Company operates a manufacturing facility where several products are made. Each product is considered a business segment, and the product managers have the opportunity

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Sampson Company operates a manufacturing facility where several products are made. Each product is considered a business segment, and the product managers have the opportunity to receive a bonus based on the profit of the segment. Franco Hopper is the manager for the scissors product line. Production and sales data for the scissors product line for the past three years are shown below: Year 1 Year 2 Year 3 Units produced 100,000 units 125,000 units 160,000 units Units sold 100,000 units 100,000 units 100,000 units Sales price per unit $ 12.00 per unit 12.00 per unit $ 12.00 per unit Variable manufacturing cost per unit 5.00 per unit 5.00 per unit 5.00 per unit Total fixed manufacturing costs 200,000 per year 200,000 per year. 200,000 per year Hopper's bonus is 0.5% of the gross profit of the scissors product line, based on absorption costing Upper management is discussing changing the bonus system so that bonuses are based on operating income using variable costing. Hopper is opposed to this change and has been trying to convince the other product mangers to join him in voicing their opposition. There are no beginning inventories in Year 1. Requirements 1. Calculate the fixed cost per unit produced for each year. 2. Prepare income statements for the three years using absorption costing, 3. Calculate Hopper's bonus based on the current plan. 4. Prepare income statements for the three years using variable costing 5. Calculate Hopper's bonus based on the proposed plan

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