The Hinckley Company manufactures electronic components for complex communication products. The company's income tax rate is 40%. The accountant has calculated pre-tax per- unit costs associated with the production and sale of 10,000 units of product XRT12 as follows: Selling price $150 Direct materials 40 Direct labor 20 Variable manufacturing support costs 2 Fixed manufacturing support costs 25 Sales commissions (10% of sales) 15 Fixed administrative salaries 8 Required: a. (5 marks) Calculate net income. b. (3 marks) Assume 15,000 units are manufactured, but selling price must be reduced to $120 per unit to sell all production. What is the net income effect? Assume fixed costs do not change