Nathan Dechter is the controller of Specialty Candies, Inc., a manufacturer of candies and confections. The company's executive planning committee has asked Nathan to prepare an analysis of two alternatives the committee is considering. The first alternative is labor-intensive. Nathan's analysis revealed the following:

The second alternative would automate the factory, increasing fixed costs and reducing variable costs:

Before sharing his analysis with the executive planning committee, Nathan thought about the probable outcome of the committee's decision making. He knows that if the committee decides to automate the plant, many of his friends in the production department will lose their jobs. Although both alternatives yield net income of \(\$ 200,000\) at the projected level of sales, Nathan is afraid that management will opt for automation. Nathan could recalculate depreciation using a method that would increase fixed costs in the short run, which would encourage management to reject the automation alternative.
\section*{Required}
A. Is there an argument that Nathan could make to support the labor-intensive alternative without manipulating the financial data? (Hint: Calculate the breakeven point for each alternative.)
B. Do you think Nathan should alter the fixed costs of the automation alternative? Would this be ethical? Would the manipulation be justified if it helps a number of employees keep their jobs? Why or why not?

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Sales revenue (projected at 6,000,000 units) Less variable costs Contribution margin Less fixed costs Net income $1,800,000 1,000,000 $ 800,000 600.000 $ 200,000