1. You are the general manager of TU Modems Inc., and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem. 100,000 Units 150,000 Units 200,000 Units Materials $ 250,000 $ 375,000 $ 500,000 Depreciation 900,000 900,000 900,000 Labor 10,000 15,000 20,000 Total costs $1,160,000 $1,290,000 $1,420,000 The market is saturated with modems, and your sales department has been able to identify only one potential buyer of your modems. This customer has numerous options and as a result is only willing to pay $300 per modem for an order of 100,000 modems. You must decide whether to sign a contract under these terms or simply shut down your operations. What is your optimal decision