Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 19,875 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,900 tons. Based on projected production and sales of 15,900 tons, the company estimates the following income using absorption costing. Sales (15,900 tons at $92 per ton) Cost of goods sold (15,900 tons at $60 per ton) Gross profit Selling and administrative expenses Income $ 1,462,800 954,000 508,800 210,600 $ 298,200 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 ($636,000/15,900 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 $210,600 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 19,875 ton level even though it expects to sell only 15,900 tons. The president is surprised that the company can report Income by producing more without increasing sales. Required: 1. Prepare an income statement using absorption costing based on production of 19,875 tons and sales of 15,900 tons. Can the company report a positive income by increasing production to 19,875 tons and storing the 3,975 tons of excess production in inventory? 2. By how much does Income increase by when producing 19,875 tons and storing 3,975 tons In Inventory compared to only producing 15,900 tons? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement using absorption costing based on production of 19,875 tons and sales of 15,900 tons. Can the company report a positive income by increasing production to 19,875 tons and storing the 3,975 tons of excess production in inventory? (Round your answers to the nearest whole dollar.) BLAZER CHEMICAL Income Statement (Absorption Costing) $ 0 Did the company report a positive income? Required 1 Required 2 By how much does income increase by when producing 19,875 tons and storing 3,975 tons in inventory compared to only producing 15,900 tons? Increase in income Kenzl, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,050 kayaks and sold 800 at a price of $1,050 each. At year-end, the company reported the following Income statement Information using absorption costing. Sales (800 x $1,050) $ 840,000 Cost of goods sold (800 x $450) 360,000 Gross profit 480,000 Selling and administrative expenses 220,000 Income $ 260,000 Additional Information a. Product cost per kayak under absorption costing totals $450, which consists of $350 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $105,000 of fixed overhead per year divided by 1,050 kayaks produced. b. The $220,000 in selling and administrative expenses consists of $75,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI Income Statement (Variable Costing) S 840,000 Sales Less: Variable expenses S 280,000 560.000 (85,000) 755,000 475,000 105,000 135,000 (240,000) Income S 235,000