Modesto Junior College - X SA-4 Ethics-The Bonus.pdf M MHE Reader b Reflect on what you have X + O File | /home/chronos/u-5d428c891f47f3e3eba23364e55c29422c743a66/MyFiles/Downloads/Ethics-The%20Bonus.pdf Company A hired John during January 2019 to manage its commercial products division. As part of his employment contract, John is guaranteed $1,000 bonus for every 1% increase in division's operating income for the current year over that of the prior year. In prior years, the commercial products division employed just-in-time inventory practices; it produced units only as they were needed and had no inventory on hand when John started. John directed his plant managers to run the plants at full capacity. John's reasoning was that, in the past, the company missed out on too many sales opportunities because of inventory shortages. The selling price and variable costs per unit remained the same from 2018 to 2019. Below is the data for 2018 and 2019 2018 2019 $480,000 Operating Income $300,000 Units Produced Units Sold 25,000 29,000 25,000 $1,305,000 25,000 Fixed manufacturing overhead costs $1,305,000 Instructions You must show your work. You may not just write the final answers. Explain the concepts and principles you used to come up with your answers. 1. Calculate John's bonus for 2019 based upon the operating income shown above. 2. Recompute the 2018 and 2019 results using variable costing. 3. ulate John's bonus for 2019 ariable costing. 4. Did John act ethically? What actions should the company take? 2:02 ...

Question

need help with Question 1 and 2

please explain step by step 

Modesto Junior College - X
SA-4
Ethics-The Bonus.pdf
M MHE Reader
b Reflect on what you have X +
O File | /home/chronos/u-5d428c891f47f3e3eba23364e55c29422c743a66/MyFiles/Downloads/Ethics-The%20Bonus.pdf
Company A hired John during January 2019 to manage its commercial products division. As part of his
employment contract, John is guaranteed $1,000 bonus for every 1% increase in division's operating
income for the current year over that of the prior year.
In prior years, the commercial products division employed just-in-time inventory practices; it produced
units only as they were needed and had no inventory on hand when John started. John directed his
plant managers to run the plants at full capacity. John's reasoning was that, in the past, the company
missed out on too many sales opportunities because of inventory shortages.
The selling price and variable costs per unit remained the same from 2018 to 2019.
Below is the data for 2018 and 2019
2018
2019
$480,000
Operating Income
$300,000
Units Produced
Units Sold
25,000
29,000
25,000
$1,305,000
25,000
Fixed manufacturing overhead costs
$1,305,000
Instructions You must show your work. You may not just write the final answers. Explain the concepts
and principles you used to come up with your answers.
1. Calculate John's bonus for 2019 based upon the operating income shown above.
2. Recompute the 2018 and 2019 results using variable costing.
3.
ulate John's bonus for 2019
ariable costing.
4. Did John act ethically? What actions should the company take?
2:02
...
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Transcribed Image Text

Modesto Junior College - X SA-4 Ethics-The Bonus.pdf M MHE Reader b Reflect on what you have X + O File | /home/chronos/u-5d428c891f47f3e3eba23364e55c29422c743a66/MyFiles/Downloads/Ethics-The%20Bonus.pdf Company A hired John during January 2019 to manage its commercial products division. As part of his employment contract, John is guaranteed $1,000 bonus for every 1% increase in division's operating income for the current year over that of the prior year. In prior years, the commercial products division employed just-in-time inventory practices; it produced units only as they were needed and had no inventory on hand when John started. John directed his plant managers to run the plants at full capacity. John's reasoning was that, in the past, the company missed out on too many sales opportunities because of inventory shortages. The selling price and variable costs per unit remained the same from 2018 to 2019. Below is the data for 2018 and 2019 2018 2019 $480,000 Operating Income $300,000 Units Produced Units Sold 25,000 29,000 25,000 $1,305,000 25,000 Fixed manufacturing overhead costs $1,305,000 Instructions You must show your work. You may not just write the final answers. Explain the concepts and principles you used to come up with your answers. 1. Calculate John's bonus for 2019 based upon the operating income shown above. 2. Recompute the 2018 and 2019 results using variable costing. 3. ulate John's bonus for 2019 ariable costing. 4. Did John act ethically? What actions should the company take? 2:02 ...

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