Academia Press produces textbooks for high school accounting courses. The company recently hired a new editor, Morgan Green, to handle production and sales of books for an introductory accounting course. Morgan's compensation depends on the gross margin associated with sales of this book. Morgan needs to decide how many copies of the book to produce. The following information is available for the fall semester of $2021$:

$($Click the icon to view the information.$)$

Morgan has decided to produce either $23,000,34,500,$ or $36,800$ books.

Required

Requirement $1.$ Calculate expected gross margin if Morgan produces $23,000,34,500,$ or $36,800$ books. $($Make sure you include the production$-$volume variance as part of cost of goods sold.$)$

Calculate the gross margin for each level of production.

$\backslash$table$[[$# of books,Gross margin$],[23,000,1215000],[34,500,],[36,800,]]$

Required

Calculate expected gross margin if Morgan produces $23,000,34,500,$ or $36,800$ books. $($Make sure you include the production$-$volume variance as part of cost of goods sold.$)$

Calculate ending inventory in units and in dollars for each production level.

Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this objective? Show your work.

a$.$ Incorporate a charge of $5\%$ of the cost of the ending inventory as an expense for evaluating the manager.

b$.$ Include nonfinancial measures when evaluating management and rewarding performance.