Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells about 100 tons of its granular. In its nine-year history, the company has never reported a net loss. However, because of this year's unusually mild winter, projected demand for its product is only 60 tons. Based on its predicted production and sales of 60 tons, the company projects the following income statement (under absorption costing). Sales (60 tons at $21,000 per ton) $1,260,000 Cost of goods sold (60 tons at $16,000 per 960,000 ton) Gross margin 300,000 Selling and administrative expenses 318,600 Net loss $ (18,600 )