Bodnar Company produces plastic patio furniture. Summary data from its $2021$ income statement are as follows:

Bodnar Company produces plastic patio furniture. Summary data from its $2021$ income statement are as follows:

Revenues $$4,000,000$

Variable costs $2,400,000$

Fixed costs $1,728,000$

Sara Oves, Bodnar$$s president, is very concerned about Bodnar Company$$s poor profitability. She asks Katie Hilton, production manager, and Kevin Jones, controller, to see if there are ways to reduce costs.

After $2$ weeks, Katie returns with a proposal to reduce variable costs to $52\%$ of revenues by reducing the costs Bodnar currently incurs for safe disposal of wasted plastic. Kevin is concerned that this would expose the company to potential environmental liabilities. He tells Katie, $$We would need to estimate some of these potential environmental costs and include them in our analysis.$$You can$$t do that,$$ Katie replies. $$We are not violating any laws. There is some possibility that we may have to incur environmental costs in the future, but if we bring it up now, this proposal will not go through because our senior management always assumes these costs to be larger than they turn out to be$.$ The market is very tough, and we are in danger of shutting down the company and costing all of us our jobs. The only reason our competitors are making money is that they are doing exactly what I am proposing.$$

A$.$ Calculate Bodnar Company's breakeven revenues for $2021.$

B$.$ Calculate Bodnar Company$$s operating income for $2021$ if variable costs had been $52\%$ of revenues.

C$.$Is Katie$$s proposal to incorrectly report environmental costs ethical? In assessing the situation, see $$Institute of Management Accountants $($IMA$)$ Statement of Ethical Professional Practice$($described in Exhibit P$-6$ of Prologue$).$ The management accountant should consider the following specific standards except:

Multiple Choice: for Breakeven.

$$4,320,000$

$$4,000,000$

$$3,300,000$

$$2,000,000$

Multiple Choice: Operating income

$$192,000$

$$190,000$

$$292,000$

$$290,000$

Multiple Choice: The management accountant should consider the following specific standards except:

Confidentiality

Competence

Integrity

Credibility