Effects of differing production levels on absorption costing income: Metrics to minimize inventory buildups. Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle production and sales of books for an introductory accounting course. Jan’s compensation depends on the gross margin associated with sales of this book. Jan needs to decide how many copies of the books to produce. The following information is available for the fall semester of 2017: 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product inexcess of demand to maximize their own bonus. The chapter suggested metrics to discourage managersfrom producing products in excess of demand. Do you think the following metrics will accomplish this objec-tive? Show your work.a. Incorporate a charge of 10% of the cost of the ending inventory as an expense for evaluating themanager.b. Include nonfinancial measures (such as the ones recommended on page 341) when evaluatingmanagement and rewarding performance. Estimated salesBeginning inventoryAverage selling priceVariable production costsFixed production costsThe fixed-cost allocation rate is based on expected sales and istherefore equal to $750,000/50,000 books = $15 per book.50,000 booksO books$ 160 per book$ 100 per book$750,000 per semesterJan has decided to produce either 50,000, 65,000, or 70,000 books.1. Calculate expected gross margin if Jan produces 50,000, 65,000, or 70,000 books. (Make sure you in-clude the production-volume variance as part of cost of goods sold.)2. Calculate ending inventory in units and in dollars for each production level.Required

Name: Effects of differing production levels on absorption costing income: M
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Description: Effects of differing production levels on absorption costing income: Metrics to minimize inventory buildups. Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle productio