Current Attempt Progress Ivanhoe Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,053,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows Per Total Undergarment Direct materials $1.96 $2,063,880 Direct labor 0.47 494,910 Variable manufacturing overhead 0.98 1,031,940 Fixed manufacturing overhead 141 1,484,730 Variable selling expenses 0.38 400.140 Totals $5.20 $5,475,600 The U.S. Army has approached Ivanhoe Fiber and expressed an interest in purchasing 249,700 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.01 per undergarment to cover all other costs and provide a profit. Presently, Ivanhoe Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go, If Ivanhoe Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order.