Saved Help Save & Exit Su Check my wo Problem 6-27 Incentives Created by Absorption Costing; Ethics and the Manager (LO6-2] Carlos Cavalas, the manager of Echo Products' Brazilian Division, is trying to set the production schedule for the last quarter of the year. The Brazilian Division had planned to sell 69,520 units during the year, but by September 30 only the following activity had been reported: Units Inventory, January 1 Production Sales Inventory, September 30 73,200 63,200 10,000 The division can rent warehouse space to store up to 30,100 units. The minimum inventory level that the division should carry is 1700 units. Mr. Cavalas is aware that production must be at least 6,000 units per quarter in order to retain a nucleus of key employees. Maximum production capacity is 44,500 units per quarter. Demand has been soft, and the sales forecast for the last quarter is only 19,100 units. Due to the nature of the division's operations, fixed manufacturing overhead is a major element of product cost. Required: 1a. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? 1b. Will the number of units scheduled for production affect the division's reported income or loss for the year? 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many units should be scheduled for production during the last quarter? Saved Help Required: 1a. Assume that the division is using variable costing. How many units should be scheduled for production during the last the year? 1b. Will the number of units scheduled for production affect the division's reported income or loss for the year? 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many units should be s for production during the last quarter? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year? Required production units Req18 > Required: 1a. Assume that the division is using variable costing. How many units should be scheduled for production du the year? 1b. Will the number of units scheduled for production affect the division's reported income or loss for the year 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bon operating income. If Mr. Cavalas wants to maximize his division's operating income for the year, how many unit for production during the last quarter? Complete this question by entering your answers in the tabs below. Req 1A Req 14 Req 2 Will the number of units scheduled for production affect the division's reported Income or loss for the year? Yes Na