Contents LA ... *CT6.7 Nishit Pravin 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 5,000 of additional bonus for every 1% increase that the division's profits exceeded those of the previous year. Soon after coming on board, Nishit 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. Nishit 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 Nishit 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 300,000 525,000 Units produced 25,000 30,000 Units sold 25,000 25,000 Fixed manufacturing overhead costs 1,350,000 1,350,000 Fixed manufacturing overhead costs per unit 54 45 Instructions a. Calculate Nishit's bonus based upon the net income shown above. b. Recompute the 2019 and 2020 results using variable costing. c. Recompute Nishit's 2020 bonus under variable costing. d. Were Nishit's actions unethical? Do you think any actions need to be taken by the company? All About You p 6-48 / 14 48