5 Problem 19-3A Income reporting, absorption costing, and managerial ethics LO P2, C1 points Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter It annually produces and sells about 100 tons of its gronular. In its nine-year history, the company has never reported a net loss. However, because of this year's unusually mild winter projected demand for its product is only 60 tons. Based on its predicted production and soles of 60 tons, the company projects the following income statement under absorption costing/ Skipped obook Sales (60 tons at 521,500 per ton) Cost of goods solo (60 tons at $16,500 per ton) Gross margin Selling and dinistrative pentes Net loss $1,290,000 990,000 300,000 318.000 $(18,600 Print Its product cost information follows and consists mainly of fixed cost because of its automated production process requiring expensive equipment ferences Variable direct labor and material costs per ton Fixed cost per ton (5760,000 tons) Total product cost per ton $ 3,833 12,667 $16,500 Selling and administrative expenses consist of variable selling and administrative expenses of $310 person and fixed selling and administrative expenses of $300,000 per year The company's president is concerned about the adverse reaction from its creditors and shareholders if the projected net loss is reported. The operations manager mentions that since the company has large storage capacity, it can report a net income by keeping its production at the usual 100 ton level even though it expects to sell only 50 tons. The president is puzzled by the suggestion that the company can report income by producing more without increasing soles. 516,580 Seling and administrative expenses consist of variable selling and administrative expenses of $310 per ton and fixed selling and administrative expenses of $300,000 per year. The company's president is concerned about the adverse reaction from its creditors and shareholders if the projected net loss is reported. The operations manager mentions that since the company has large storage capacity, it can report o net income by keeping its production at the usual 100-ton level even though it expects to sell only 60 tons. The president is puzzled by the suggestion that the company can report income by producing more without increasing sales, Required: 1. Con the company report a net income by increasing production to 100 tons and storing the excess production in inventory? Complete the following income statement (using absorption costing) based on production of 100 tons and sales of 60 tons. (Round your answers to the nearest whole dollar.) CAS Cost of goods sold: Production volume 60 tons 100 tons Cost of goods sold per unit Number of tons sold Total cost of goods sold BLAZER CHEMICAL Income statement Absorption method Production volume 60 tons 100 tons Salos volute - 50 tons 0 0 $ 0 $