*Waterways Continuing Problem-8 (Part Level Submission) When Waterways' management met to review the year-end financial statements, the room was filled with excitement Sales had been exceptional during the year and every department had exceeded the budget and last year's sales totals. Several years ago Waterways had implemented a bonus system based on percentage of sales over budget, and the managers were expecting healthy cheques at the end of the year. Yet the plant manager, Ryan Smith, was stunned into silence when he read the bottom line on the income statement for manufacturing operations. It was showing a loss He immediately approached the CFO asking for an explanation. Ryan wondered, "Why did we go through all that trouble and inconvenience to adapt those cost-cutting measures when they had the opposite effect?" One of those measures was to move toward lean manufacturing, The CFO retrieved the following information with respect to the top-selling line from the manufacturing operations for the last three years. Production on this line began on January 1, 2014: 2014 2015 2016 0 80,000 83,000 66,400 70,000 73.000 86,400 $35 $35 $37 $5 $5 $6 Beginning inventory of finished units Production in units Sales in units Selling price Direct material Direct labour Variable manufacturing overhead Variable selling and administration Fixed manufacturing overhead Fixed selling and administration 6 6 7 7 7 664,000 664,000 664,000 120,000 120,000 120,000 Waterways uses the absorption-costing method and accounts for inventory using FIFO. *(a1) Your answer is partially correct. Using the information provided, recreate Waterways' statements for this division using condensed, three-year comparative income statements. WATERWAYS CORPORATION Absorption Costing Income Statement For the year ending December 31 2014 2015 2016 Sales 512450000 55.000 $3196800 Cost of Goods Sold Beginning Inventory, January 4223000 Add. Cost of Goods Manufactured 11784000 11820000 11726400 1220000 Cast of Goods Available for Sale 11784000 72040000 T7946400 Less Ending Inventory, Decemebr 31 F223000 220DOG 1561000 11829000 1946400 Cross Profit 1999000 726000 1250400 Selling and Administration Expenses 1510000 4511000 T724800 TOperating Income/ (LOSS) / (Loss) $1279000 4215000 1525600 Attempts: 1 of 1 USE *(b1) Using the information provided, prepare condensed, three-year comparative income statements using the variable-casting method. WATERWAYS CORPORATION Variable Costing Income Statement For the years ending December 31 2014 2015 2016 [no answer] $ Ino answer] [no answer) [no answer [no answer]: [no answer) [no answer (no answer): (no answer] (no answer [no answer [no answer [no answer]: [no answer] [no answer Reconcile the variable-costing income with the absorption costing income calculated in part (a). 2014 2015 2016 Variable costing income $ $ $ Add: Deferred fixed manufacturing overhead Less: Released fixed manufacturing overhead Absorption costing income