Carlos Cavalas, the manager of Echo Products$$ Brazilian Division, is trying to set the production schedule for the last quarter of the year. The Brazilian Division had planned to sell $68,090$ units during the year, but by September $30$ only the following activity had been reported:

Units

Inventory, January $10$

Production $72,100$

Sales $61,900$

Inventory, September $3010,200$

The division can rent warehouse space to store up to $29,600$ units. The minimum inventory level that the division should carry is $1,400$ units. Mr$.$ Cavalas is aware that production must be at least $6,120$ units per quarter in order to retain a nucleus of key employees. Maximum production capacity is $44,300$ units per quarter.

Demand has been soft, and the sales forecast for the last quarter is only $20,000$ units. Due to the nature of the division$$s operations, fixed manufacturing overhead is a major element of product cost.

Required:

$1$a$.$ Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year?

$1$b$.$ Assume that the division is using variable costing. Will the number of units scheduled for production affect the division$$s reported income or loss for the year?

$2.$ Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional operating income. If Mr$.$ Cavalas wants to maximize his division$$s operating income for the year, how many units should be scheduled for production during the last quarter?