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Straight Lines Pen \& Ink Contribution Margin \& Cost-Profit Volume Analysis Straight Lines Pen \& Ink Company produces ink pens. The pens only come in one style and one color -- Black Tubular pens. The company produces 400,000 pens a month, but the relevant range for producing the product is 300,000 to 500,000 . The company's pens are sold for $0.75 a piece to local retailers. Immediately below is a summary of the costs of producing the pens. 4. What happens to the cost of producing a pen under absorption costing and variable costing as pen production increases? Pen production decreases? Why does this happen? (Think about this answer on a cost per unit basis) 5. Assume that only 300,000 of the pens are sold in one month, 100,000 are in inventory. What is the net income under a full absorption income statement and under a contribution income statement? Why are they different? 6. What is the number of pens that Straight Line Pen \& Ink must sell to break even