Jarvis and Co., computes its profit using absorption costing (recall that Absorption Costing- based Income Statement is also known as the Gross Margin Income Statement). The company provides the following information for the most recent year of operations (there was no beginning inventory for the most recent year). Revenue $1,200,000 COGS 640,000 Gross Margin 560,000 SGA costs 415,000 Profit before tax 145,000 The firm also informs you that their manufacturing cost structure is as follows: materials 20%, labor 30% and overhead 50%. It applies overhead based on labor cost and indicates that 30% of overhead is variable (the remainder is fixed). Moreover, 50% of the SGA costs are fixed. This year's production and sales were 120,000 units. For the forthcoming year, Jarvis is planning to produce 135,000 units. It is projecting a modest growth in sales of just 5%. The CEO, however, is pleasantly surprised when projected profit increases by around 30%