Smoothit Inc is facing a problem with their 4th quarter camings on December 25. Their earningstarget is $2.500.000 and the data so far is as follows: Sales Revenue $25,000,000 ($500/unit) Variable COGS $10,000,000 ($200/unit) Fixed OH $10,000,000 Fixed SOLA $2,000,000 Variable SG&A 5% -> 51 x 26,660,000 > 10.000 Smoothit has had a policy of having croinventories at the end of cach quarter. No further sales are possible during the year and all the units produced so far have been sold. The CEO is planning to cut the sales commission to meet the earnings target, but the accountant, Mr. Shady Helper.plans on suggesting producing items for inventory. 4.1 How much will the sales commissions have to be cut in order to meet the carines target? Easenings as per the rushing scenario - Amanue - (cous + FoH+F8*A + V3#A) = 35,000,000 - (10,000,000 + 10,000+ 2.000/Bot Last = 1,35D1CCD Exbor Lastning Msg. 3.000.000 - 1,950,000 750,000 ./ duchon in the commussion = 750.00 - 25.000,00 3.1 4.2 How many items need to be produced for inventory to meet the earnings target if the sales commission is left unchanged at 5% Cort FOH Teads to be expensed - 25,000,0 - 10,000,000 - 3,000,000 4.3 Comment on the ethics of each of these strategies Page 3 of