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Brett Stern was hired during January 2020 to manage the home products division of Hi-Tech Products. As part of his employment contract, he was
Brett Stern was hired during January 2020 to manage the home products division of Hi-Tech Products. As part of his employment contract, he was told that he would get $5,600 of additional bonus for every 1% increase that the division's profits exceeded those of the previous year. Soon after coming on board, Brett met with his plant managers and explained that he wanted the plants to be run at full capacity. Previously, the plant had employed just-in-time inventory practices and had consequently produced units only as they were needed. Brett stated that under previous management the company had missed out on too many sales opportunities because it didn't have enough inventory on hand. Because previous management had employed just-in-time inventory practices, when Brett came on board there was virtually no beginning inventory. The selling price and variable costs per unit remained the same from 2019 to 2020. Additional information is provided below. 2019 2020 Net income Units produced Unit sold $335,000 $613,050 28,000 33,600 28,000 28,000 Fixed manufacturing overhead costs $1,512,000 $1,512,000 Fixed manufacturing overhead costs per unit $54 $45 (a)
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