Requirements 1. Calculate expected gross margin if Leigh produces 21,000, 25,200, or 29,400 books. (Make sure you include the production-volume variance as part of cost of goods sold.) Calculate ending inventory in units and in dollars for each production level. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this objective? Show your work. a. Incorporate a charge of 5% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. 2. 3. More Info 1 Estimated sales 21,000 books Beginning inventory 0 books Average selling price78 per book Variable production costs $ 56 per book Fixed production costs 315,000 per semester The fixed-cost allocation rate is based on expected sales and is therefore equal to $315,000/21,000 books $15 per book