Michael Cohen is a refrigerator factory manager. Suppose:

Manufacturing costs for a new QR$31$ refrigerator consist entirely of fixed manufacturing overhead costs $($ $$5,000$ regardless of the production level$).$

Michael receives a year$-$end bonus of $10\%$ on the plant's net income based on the 'traditional' income statement $($I$/$S$).$

A company focus group indicates initial sales for the QR$31$ refrigerator in the next year will be $1$ unit for $$1,000.$

OPTION $1-$ Produced $1$ unit; sold $1$ unit

OPTION $2-$ Produced $5,000$ units; sold $1$ unit

Because Michael is not very comfortable with numbers, he consults with his personal accountant $($you$)$ about what he should choose.

Explain your answer as though you are talking to Michael, your client via a video that explains:

$-$How will each option impact the 'traditional' I$/$S of Company XYZ$?$

$-$How will each option impact Michael's end of year bonus based on the 'traditional' I$/$S$?$

$-$Which option would maximize Michael's wealth?