The Bavarian Beer Mug Company is a maker of traditional Bavarian Beer Mugs with lids (cf. Picture). It imprints the coat of arms of the Free State of Bavaria, company logos and other sayings on beer mugs for both commercial and wholesale markets. The firm has the capacity to produce 58.4 million beer mugs per year, but the COVID-19-Pandemic has cut production and sales in the last year to 22.2 million beer mugs. The following table shows the operating statement for 2021. Bavarian Beer Mug Company Income Statement Year Ending 2021 () At the end of 2021, there was no ending inventory of finished goods. The owner of the company, a close relative to King Ludwig II of Bavaria (the creator of Neuschwanstein castle), is very concerned about the 1,500,000 operating loss and hires an outside consultant who reports back that the firm suffers from two problems. First, the managing director of the company receives a fixed salary, and since she owns no stock, she has very little incentive to worry about company profits. The second problem is that the company has not aggressively marketed its product and has not kept up with changing markets. Luckily, the current managing director retired at the end of 2021 anyway and was replaced by somebody with a proven track record as a turnaround specialist. The new managing director is hired with an employment contract that pays a fixed wage of 52,000 a year plus 13 percent of the firm's operating profits (if any). In 2022, the new managing director increases the selling and administration budget to 15,200,000 (which includes his salary of 52,000 ). He designs a new line of "gender diversity and politically correct" sayings to imprint on the beer mugs and expands inventory and the number of distributors handling the mugs. Production is increased to 66,600,000 beer mugs and sales climb to 26,640,000 beer mugs at 2.00 each. Variable costs per beer mug remain at 0.50 and fixed costs at 27,200,000 in 2022 . At the end of 2022, the managing director meets with the owner and announces he has accepted another job. He believes he has successfully gotten Bavarian Beer Mug back on track and thanks the owner for giving him the opportunity. His new job is helping to turn around another struggling company. Required: a. Calculate the managing director's bonus for 2022 based on operating profits calculated using a1. absorption costing. a2. variable costing. b. Calculate the Value of the Ending Inventory for the methods used in a1 and a2. c. Evaluate the performance of the new managing director in 2022. Do you think he did a good job bringing Bavarian Beer Mug Company back on track? Base your reasoning and analysis on your previous calculations