Question 2) Related to the Crawford Self-study case, assume that Myrtle Douglas is compensated as a function of net income. Specifically, Myrtle receives a bonus of 10% of the after-tax net income. What is Myrtle's preferred production schedule? Please do not consider Myrtle's bonus as part of the net income calculation. Also, remember that Myrtle is retiring at the end of 1998.

Myrtle Douglass is divisional manager for Crawford Electronics. She is considering introducing a new remote control device to the existing product line. Introducing the new remote control would require the purchase of a new machine. This machine would cost $10,000. last for two years. and have zero salvage value at the end of the two years. Myrtle estimates the following production, sales, and costs for this new product line in each of the two years that the new remote control would be produced: _._Year_ 13% 1.9.23 Production {units} 10.000 15.000 Sales {units} 3.000 11000 Variable production cost per unit $5.00 $5.00 Selling price per unit $3.00 $3.00 1ifariahle 5&9; per unit $1.00 $1.00 Total Filled SSEA Expenses $2,500 $3,000 Crawford Electronics uses full absorption for both hook and tax purposes. It is company policy that straight line depreciation is used for all production machinery, and that fixed overhead is allocated on the basis of units produced. Crawford Electronics uses a LIFO [last in. first out} inventory flow assumption. Crawford Electronics uses a 10% discount rate for all net present value and residual income calculations. and faces a tan rate of 40%. For purposes of the analysis. assume that all sales of the new remote control will he paid in cash, and that all expenses associated with producing the new remote control will he paid immediately in cash