Address the question in the picture. Incentives Created by Absorptlon CostlIng; Ethlcs and the ManagerAristotle Constantinos, the manager of Dural Products' Australian Division, is trying to set the production schedule for thelast quarter of the year. The Australian Division had planned to sell 100,000 units during the year, but current projectionsindicate sales will be only 78,000 units in total. By September30 the following activity had been reported:UnltsInventory, January 1Production72,000Sales60,000Inventory, September 30 12,000Demand has been soft and the sales forecast for the last quarter is only 18,000 units. The division can rent warehousespace to store up to 30,000 units The division should maintain a minimum inventory level of at least 1,500 units. Mr.Constantinos is aware that production must be at least 6,000 units per quarter in order to retain ,a nucleus of keyemployees. Maximum production capacity is 45,000 units per quarter. Due to the nature of the divisions operations, fixedmanufacturing overhead is a major element of product cost.Required:1. Assume that the division is using variable costing. How many units should be scheduled for production during the lastquarter of the year? (The basic formula for computing the required production for a period in a company is: Expected sales+ Desired ending inventory – Beginning inventory = Required production.) Show computations and explain your answer.Will the number of units scheduled for production affect the division's reported profit for the year? Explain.2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based onthe division's net operating income. If Mr. Constantinos wants to maximize his division's net operating income for the year.How many units should be scheduled for production during the last quarter? [See the formula in (1) above) Explain.3. Identify the ethical issues involved in the decision Mr. Constantinos must make about the level of production for the lastquarter of the year.

Absorption costing refers to the method of accounting which depicts the full cost of manufacturing…

Incentives Created by Absorptlon Costing; Ethlcs and the Manager Aristotle Constantinos, the manager of Dural Products' Australian Division, is trying to set the production schedule for the last quarter of the year. The Australian Division had planned to sell 100,000 units during the year, but current projections indicate sales will be only 78,000 units in total. By September30 the following activity had been reported: Units Inventory, January 1 이 Production |72,000이

Incentives Created by Absorptlon Costing; Ethlcs and the Manager Aristotle Constantinos, the manager of Dural Products' Australian Division, is trying to set the production schedule for the last quarter of the year. The Australian Division had planned to sell 100,000 units during the year, but current projections indicate sales will be only 78,000 units in total. By September30 the following activity had been reported: Units Inventory, January 1 이 Production |72,000이

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Define the term understand ability.
Define the term lnvesting activities? Explain with an example?
M. What is meant by perspective getting? How does note-taking improve perspective-getting?
Explain what is meant by the decision pattern ?
Write out the equation for the SML and explain its meaning.
Define strategy.
What is view modeling?
What does the concept "substance over form" stand for? Can you provide me with some examples?
Explain the Abstract and Opinion Method?
Explain planning decisions.