FDP Company produces a variety of home security products. Gary Price, the company$$s president, is concerned with the fourth$-$quarter market demand for the company$$s products. Unless something is done in the last two months of the year, the company is likely to miss its earnings expectation of Wall Street analysts. Price still remembers when FDP$$s earnings were below analysts$$ expectation by two cents a share three years ago and the company$$s share price fell $19\%$ the day earnings were announced. In a recent meeting, Price told his top management that something must be done quickly. One proposal by the marketing vice president was to give a deep discount to the company$$s major customers to increase the company$$s sales in the fourth quarter. The company controller pointed out that while the discount could increase sales, it may not help the bottom line; to the contrary, it could lower income. The controller said, $$Since we have enough storage capacity, we might simply increase our production in the fourth quarter to increase our reported income.$$

Required

Gary Price is not sure how the increase in production without a corresponding increase in sales could help boost the company$$s income. Explain to Price how reported income varies with respect to production level.

Is there an ethical concern in this situation? If so$,$ which parties are affected? Explain.