Scott Wadzicki was hired in January 2016 to manage the products division of Advanced Techno. As part of his employment con- tract, he was told that he would get an extra $5,000 bonus for every 1% increase by which the division's profits exceeded the previous year's profits.
Soon after coming on board, Scott met with his plant managers and explained that he wanted the plants to be run at full capacity. Previously, the plant had employed just-in-time inventory practices and had consequently produced units only as they were needed. Scott stated that, under the previous management, the company had missed out on too many sales opportunities because it did not have enough inventory on hand. Because the previous management had employed just-in-time inventory practices, when Scott came on board, there was virtually no beginning inventory. The selling price and variable cost per unit remained the same from 2015 to 2016. Additional information follows:

Instructions
(a) Calculate Scott's bonus based on the net income figures shown.
(b) Recalculate the 2015 and 2016 results using variable costing.
(c) Recalculate Scott's 2016 bonus under variable costing.
(d) Were Scott's actions unethical? Do you think any actions need to be taken by the company?

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2015 2016 Net income Units produced Units sold Fixed manufacturing costs Fixed manufacturing costs per unit $ $ 300,00 25,000 25,000 $1,350,000 54 525,000 30,000 25,000 $1,350,000 45