Analytical Thinking [L04-2, LO4-3, LO4-4] Two dollars of gross margin per briefcase? That's ridiculous!" roared Roy Thurmond, president of First-Line Cases, Inc. "Why do we go on producing those standard briefcases when we're able to make over $12 per unit on our specialty items? Maybe it's time to get out of the standard line and focus the whole plant on specialty work." Mi: Thurmond was refering to a summary of unt costs and revenues that he had just recelved from the company's accounting department: Standard Specialty Briefcases Briefcases Selling price per unit Unit product cost s23.55 $41.60 21.55 28.98 $ 2.00 12.62 Gross margin per unit FirstLine Cases produces briefcases from leather, fabric, and synthetic materials in a single plant. The basic product is a standard briefcase that is made from leather lined with fabric. The standard briefcase is a high-quality item and has sold well for ma Last year, the company decided to expand its product line and produce specialty briefcases for special orders. These briefcases differ from the standard in that they vary in size, they contain the finest leather and synthetic materials, and they are imprinted with the buyer's name. To reduce labor costs on the specialty briefcases, automated machines do most of the cutting and stitching. Th machines are used to a much lesser degree in the production of standard briefcases "1 agree that the specialty business is looking better and better," replied Beth Mersey, the company's marketing man seems to be plenty of demand out there, particularly because the competition hasn't been able to touch our price. Did you know that Velsun Company, our biggest competitor, charges over $47 a unit for its speciaity items? Now that's what I call gouging the customert A breakdown of the manufacturing cost for each of FirstLine Cases' products is given below