Problem 5-1 Variable and Full Costing: Sales Constant but Production Fluctuates Spencer Electronics produces a wireless home lighting device that allows consumers to turn on hom lights from their cars and light a safe path into and through their homes. Information on the first three years of business is as follows: Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit Fixed selling and administrative expense 2017 20,000 20,000 $750,000 150 250 220,000 2018 20,000 25,000 $750,000 150 250 220,000 2019 Total 20,000 60,000 15,000 60,000 $750,000 150 250 220,000 What-if? Consider the following after you have completed the requirements of P5-1. Suppose the manager of Spencer Electronics is paid a bonus based on 10% of gross margin for the period. Determine the effect that increasing production in 2017 to 23,000 units will have on his bonus for 2017 assuming sales and costs remain as given. If the manager receiving the bonus initiated the increase in production, is this considered ethical? Explain. Full cost per unit Original bonus Bonus with increased production Increase in bonus