Blazer Chemical produces and sells an ice$-$melting granular used on roadways and sidewalks in winter. It annually produces and sells $21,750$ tons of its granular. Because of this year$$s mild winter, projected demand for its product is only $17,400$ tons. Based on projected production and sales of $17,400$ tons, the company estimates the following income using absorption costing.

Sales $(17,400$ tons at $$112$ per ton$)$ $ $1,360,000$

Cost of goods sold $(17,400$ tons at $$60$ per ton$)1,044,000$

Gross profit $316,000$

Selling and administrative expenses $316,000$

Income $ $0$

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

Direct materials $ $13$ per ton

Direct labor $ $4$ per ton

Variable overhead $ $3$ per ton

Fixed overhead $($$$696,000/17,400$ tons$)$ $ $40$ per ton

Selling and administrative expenses consist of variable selling and administrative expenses of $$6$ per ton and fixed selling and administrative expenses of $$211,600$ 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 $21,750$ ton level even though it expects to sell only $17,400$ 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 $21,750$ tons and sales of $17,400$ tons. Can the company report a positive income by increasing production to $21,750$ tons and storing the $4,350$ tons of excess production in inventory?

By how much does income increase by when producing $21,750$ tons and storing $4,350$ tons in inventory compared to only producing $17,400$ tons?

$($Thank you!$)$