Walker Boat Company produces bass boats. The following comments were found in the Managements Discussion and Analysis section of the annual reports.

Bass boat production includes a significant amount of robotic manufacturing costs, which do not vary with production levels.

a. What effect would the change in level of boats produced have on the total robotic costs?

b. What effect would the change in level of boats produced have on the unit costs of the boats?

c. From the external reporting point of view, how would your answer to (b) possibly lead to unethical behavior by management anxious to produce a better bottom-line this period? (Not that Cost of Goods Sold, an expense item on the Income Statement, is a function of units SOLD, not produced).