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Carlos Cavalas, the manager of Echo Products$$ Brazilian Division, is setting the production schedule for the last quarter of the year. The Brazilian Division planned to sell $68,420$ units during the year, but by September $30$ only the following activity had been reported:

$$UnitsInventory$,$ January $10$Production$73,400$Sales$62,200$Inventory, September $3011,200$

The division can rent warehouse space to store up to $30,600$ units. The minimum inventory level the division should carry is $2,500$ units. The minimum production must be at least $6,720$ units per quarter to retain a nucleus of key employees. Maximum production capacity is $45,100$ units per quarter.

The sales forecast for the last quarter is only $19,800$ units and fixed manufacturing overhead is a major element of product cost.

Required:

$1$a$.$ Assume the division is using variable costing. How many units should be scheduled for production during the last quarter of the year?

$1$b$.$ Assume the division is using variable costing. Will the number of units scheduled for production affect the division$$s reported income or loss for the year?

$2.$ Assume the division is using absorption costing and 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? Carlos Cavalas, the manager of Echo Products' Brazilian Division, is setting the production schedule for the last quarter of the year. The Brazilian Division planned to sell $68,420$ units during the year, but by September $30$ only the following activity had been reported:

The division can rent warehouse space to store up to $30,600$ units. The minimum inventory level the division should carry is $2,500$ units. The minimum production must be at least $6,720$ units per quarter to retain a nucleus of key employees. Maximum production capacity is $45,100$ units per quarter.

The sales forecast for the last quarter is only $19,800$ units and fixed manufacturing overhead is a major element of product cost.

Required:

$1$a$.$ Assume the division is using variable costing. How many units should be scheduled for production during the last quarter of the year?

$1$b$.$ Assume the division is using variable costing. Will the number of units scheduled for production affect the division's reported income or loss for the year?

$2.$ Assume the division is using absorption costing and 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?

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