or more, even if that sales level could not be reached. He r a presenter, from a seminar that he recently attended, describing how income could be increased by producing more than can be sold. He Elias to determine how many extra units they would need to produce urged achieve the profit goal and, thus, earn the bonus. 1. If sales only reach 450,000 units for the year, how many additional units would have to be produced, given the current selling price and cost structure, to meet the budgeted profit of $2,200,000 2. Prepare an absorption costing income statement to prove your answer What ethical responsibility, if any, does Elias have in this situation? 4. What is there about the bonus plan that potentially encourages unethical above 3. behavior? MINI-CASE 2 Differential analysis Denali Company manufactures household products such as windows, light fixtures, ladders, and work tables. During the year it produced 10,000 Model 10x windows but only sold 5,000 units at $40 each. The remaining units cannot be sold through normal channels. Cost for inventory purposes on December 31 included the following data on the unsold units: $10.00 Labor 5.00 3.00 2.00 $20.00 Denali can sell the 5,000 windows at a liquidation price of $20.00 per window r to Variable overhead Fixed overhead roblem 2 but it will incur a packaging and shipping charge of $7.50 per window. Required: 1. Identify the relevant costs and revenues for the liquidation sale alterna- tive. Is Denali better off accepting the liquidation price rather than doing nothing? 2. Assume that Model 10X can be reprocessed to another size window, Model 20X, which will require the same amount of labor and overhead as was required to initially produce, but sells for only $33. Determine the most profitable course of action liquidate or reprocess