Academy Press produces textbooks for high school accounting courses. The company recently hired a new editor, Bailey Green, to handle production and sales of books for an introductory accounting course. Bailey's compensation depends on the gross margin associated with sales of this book. Bailey needs to decide how many coples of the book to produce. The following information is available for the fall semester 2020: (Click the loon to view the information.) Bailey has decided to produca ather 25,000, 30,000, or 35,000 books. Read the requirements. Requirement 1. Calculate expected gross margin Bailey produces 25,000, 30,000, or 35,000 books. (Make sure you include the production-volume variance as part of cast of goods sold.) Calculate the gross margin for each level of production. Begin with 25,000 books, then 30,000 books, and lastly 35,000 books. (Enter a "C" for any zero balance accounts. If an account does not have a variance, do not select a label.) Revenues Cost of goods sold Production-volume variance Net cost of goods sold Grose margin 25,000 books Requirements 1. Calculate expected gross margin if Bailey produces 25,000, 30.000, or 35,000 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in collars for each production level. 3. 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 10% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. More info Estimated sales Beginning Inventory Average selling price Variable production costs Fixed production costs 25,000 books 0 books $83 per book $46 per book $450,000 per semester The fixed-cost allocation rate is based on expected sales and is therefore equal to $450,000+25,000 books = $18 per book. Print Done Print Done