Blazer Chemical produces and sells an ice$-$melting granular used on roadways and sidewalks in winter. It annually produces and sells $20,125$ tons of its granular. Because of this year's mild winter, projected demand for its product is only $16,100$ tons. Based on projected production and sales of $16,100$ tons, the company estimates the following income using absorption costing.

Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment.

$\backslash$table$[[$Direct materials,$$13$ per ton$],[$Direct labor,$$4$ per ton$],[$Variable overhead,$$3$ per ton$],[$Fixed overhead tons$),$$$40$ per ton$]]$

Selling and administrative expenses consist of variable selling and administrative expenses of $$6$ per ton and fixed selling and administrative expenses of $$225,400$ per year. The company's president will not earn a bonus unless a positive income is reported. The controller mentions that because the company has large storage capacity, it can report a positive income by setting production at the usual $20,125$ ton level even though it expects to sell only $16,100$ tons. The president is surprised that the company can report income by producing more without increasing sales.

Required:

Prepare an income statement using absorption costing based on production of $20,125$ tons and sales of $16,100$ tons. Can the company report a positive income by increasing production to $20,125$ tons and storing the $4,025$ tons of excess production in inventory?

By how much does income increase by when producing $20,125$ tons and storing $4,025$ tons in inventory compared to only producing $16,100$ tons?

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Required $1$

Prepare an income statement using absorption costing based on production of $20,125$ tons and sales of $16,100$ tons. Can the company report a positive income by increasing production to $20,125$ tons and storing the $4,025$ tons of excess production in Inventory?

Note: Round your answers to the nearest whole dollar.

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$\backslash$table$[[$BLAZER CHEMICAL$],[,$Income Statement $($Absorption Costing$)],[,],[,],[,],[,],[,$$