Smoothit Inc is facing a problem with their Fourth quarter earnings on December 25. Their earnings target 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)# of units sold = 50,000

Fixed OH$10,000,000

Fixed S&A$ 2,000,000

Variable S&A5% Commission onSales

Smoothit has had a policy of having zero inventories at the end of each 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, has an alternative plan of producing items for inventory.

6.1How much will the sales commissions have to be cut in order to meet the earnings target?

6.2How many items need to be produced for inventory to meet the earnings target if the sales commission is left unchanged at 5%

6.3Comment on the ethics of each of these strategies.

P.S. I have the solution to these questions but I still don't understand. I need a detailed explanation, please.