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4. (35 points) Everest Inc. manufactures a single product. Its executive team received the following information, representing the actual numbers for the year so far:
4. (35 points) Everest Inc. manufactures a single product. Its executive team received the following information, representing the actual numbers for the year so far: Revenues $7,500,000 Selling price per unit $250 Variable manufacturing overhead costs per unit produced 22 Total fixed manufacturing overhead per year 2,100,000 Direct materials per unit produced 53 Direct labor per unit produced 25 Variable selling & administration expense per unit sold 32 Total fixed selling & administration expense per year 720,000 The company management team is promised a considerable bonus if a GAAP earnings target of $1,100,000 is met. No further sales are possible during the year, the company started the year with no inventory, and currently has 5,000 units in its inventory. The company's controller proposes to produce even more units for the inventory to meet the earnings target. Note: GAAP requires the use of absorption costing. a. What is GAAP earnings at the current point? b. What is variable-costing earnings at the current point
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