Aristotle Constantinos, the manager of DuraProducts" Australian Division, is trying to set the production schedule for the last quarter of the your The Australian Division had planned to sell 100,000 units during the year, but current projections indicate sales will be only 78,000 units in total. By September 30th the following activity had been reported Units Inventory, January 11 0 Production 72,000 Sales 60.000 Inventory, September 30 12,000 Demand has been soft, and the sales forecast for the last quarter is only 18,000 units. The division can rent the warehouse space to store up to 30,000 units. The division should maintain a minimum inventory of a feast 1,500 units. Mr. Constantinos is aware that production must be at least 6,000 units/quarter to retain a nucleus of key employees. The maximum production capacity is 45,000 units quarter. Due to the nature of the division's operations, fived manufacturing overhead (OH) is a significant element of the product cost. Questions: 1. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? (The basic formula for computing the required production for a a company Expected sales + Desired ending inventory - Beginning inventory Required Production). Show your computation and explain your answer? Will the number of units scheduled for production affects the division's reported profits for the year? Explain. 2. Assure that the division uses absorption costing and that the divisional manager is given an annual bonus based on the division's et operating income. If Mr. Constantinos wants to maximize his division's net operating income for the year, how many units should be scheduled for production during the last quarter? (See the formula in (1) above.] Explain 3. Identify the issues involved in the decision Mr. Constantinos must make about the production level for the last quarter of the year. Then, discuss as a group and decide what you will do