Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing.

Sales price $ 56.00 per unit Direct materials $ 9.00 per unit Direct labor $ 6.50 per unit Variable overhead $ 11.00 per unit Fixed overhead $ 720,000 per year

1. Compute gross profit assuming (a) 60,000 units are produced and 60,000 units are sold and (b) 80,000 units are produced and 60,000 units are sold.

2. By how much would the companys gross profit increase or decrease from producing 20,000 more units than it sells?