3 Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells20,625 tons of its granular. Because of this year's mild winter, projected demand for its product is only 16,500 tons. Based on projectedproduction and sales of 16,500 tons, the company estimates the following income using absorption costing.Sales (16,500 tons at $100 per ton)Cost of goods sold (16,500 tons at $60 per ton)Gross profitSelling and administrative expensesIncomeIts product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipment.Direct materialsDirect laborVariable overheadFixed overhead ($660,000/16,500 tons)$ 1,650,000990,000660, 000211,000$ 449,000Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $211,000 per year. The company's president will not earn a bonus unless a positive income is reported. Thecontroller mentions that because the company has large storage capacity, it can report a positive income by setting production at theusual 20,625 ton level even though it expects to sell only 16,500 tons. The president is surprised that the company can report incomeby producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 20,625 tons and sales of 16,500 tons. Can thecompany report a positive income by increasing production to 20,625 tons and storing the 4,125 tons of excess production ininventory?$ 13 per ton$4 per ton$3 per ton$40 per ton2. By how much does income increase by when producing 20,625 tons and storing 4,125 tons in inventory compared to onlyproducing 16,500 tons?Complete this question by entering your answers in the tabs below.Required 2Required 1Prepare an income statement using absorption costing based on production of 20,625 tons and sales of 16,500 tons. Can thecompany report a positive income by increasing production to 20,625 tons and storing the 4,125 tons of excess production ininventory? (Round your answers to the nearest whole dollar.)BLAZER CHEMICALIncome Statement (Absorption Costing)Did the company report a positive income? Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells20,625 tons of its granular. Because of this year's mild winter, projected demand for its product is only 16,500 tons. Based on projectedproduction and sales of 16,500 tons, the company estimates the following income using absorption costing.Sales (16,500 tons at $100 per ton)Cost of goods sold (16,500 tons at $60 per ton)Gross profitSelling and administrative expensesIncome$ 1,650,000990,000660, 000211,000$ 449,000Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipment.Direct materialsDirect laborVariable overheadFixed overhead ($660,000/16,500 tons)$ 13 per ton$4 per ton$3 per ton$40 per tonSelling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $211,000 per year. The company's president will not earn a bonus unless a positive income is reported. Thecontroller mentions that because the company has large storage capacity, it can report a positive income by setting production at theusual 20,625 ton level even though it expects to sell only 16,500 tons. The president is surprised that the company can report incomeby producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 20,625 tons and sales of 16,500 tons. Can thecompany report a positive income by increasing production to 20,625 tons and storing the 4,125 tons of excess production ininventory?2. By how much does income increase by when producing 20,625 tons and storing 4,125 tons in inventory compared to onlyproducing 16,500 tons?Complete this question by entering your answers in the tabs below.Required 1 Required 2By how much does income increase by when producing 20,625 tons and storing 4,125 tons in inventory compared to onlyproducing 16,500 tons?Increase in income

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Absorption Costing
A managerial accounting technique known as "absorption costing," also known as…