For the income statement, fill this out:

	Gen x	Gen Y	Total
Contribution margin
Direct fixed expenses
Segment margin
Selling and admin fixed
Operating income

To calculate the maximum variable cost per unit of the Gen Z product:

CM of Gen X (You have data) + Gen Y (You have data) + CM Gen Z (you need to put X for variable product cost = $CM above

Find X, X = is the maximum variable cost per unit of the Gen Z product

Solmarex Inc. has a June 30th year-end. It has developed two key hardware components; Gen X and Gen Y. The forecasted operating results for the first six months of the year are presented in the following statement. Solmarex Inc. Forecasted Result of Operations For the six months ended Dec 31 (in thousands) GenX 100 $2,000 1,600 $ 400 GenY 100 $3,000 1,900 $1,100 Total 200 $5,000 3,500 $1,500 Units Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Variable Fixeda Total selling & administrative expenses Income (loss) before taxes $ 400 240 $ 640 S (240) $ 700 360 $1,060 $ 40 $1,100 600 $1,700 $ (200) a Fixed selling & administrative expenses are allocated between the two products on the basis of relative sales dollars. These expenses are avoidable only if the entire plant is closed. The product costs per unit are as follows: GenX GenY Direct materials $ 7 $ 8 Direct labor 4 4 Variable manufacturing overhead Fixed manufacturing overhead 4 5 Total product cost $16 $19 Alexa provides you this additional information: Fixed manufacturing overhead per unit is based on normal manufacturing capacity. Depreciation constitutes 50% of the fixed manufacturing overhead cost of each product and is unavoidable. The remaining fixed manufacturing overhead expenses arise from factory personnel assigned to particular products. Variable selling and administrative expenses are $4 and $7 per unit, respectively, for the GenX and Gen Y products. Alexa asks you to find out the unit selling price Solmarex should assign to each of product line to maximize net income for the second six months of the year. Also, based on the unit prices you have chosen, indicate the company's expected income before taxes for the second six months of the year (support your answer with an income statement prepared in the contribution margin format. Show the contribution margin and the segment margin for each product). It is important to know if based on the unit prices you have chosen if company should drop GenX product for the second six months of the year. As you were about to wrap up the meeting Alexa mentions an opportunity to outsource production of the GenX line. Alexa informs you of a local manufacturer, Fastteck Inc., who has offered to make GenX product for $13 per case. Solmarex would sell the product to its existing customers. This would mean that Solmarex could use its idle resources to make a new a new line of hardware called GenZ. Management believes the company could sell 45,000 units of this new product for $40 per case; variable selling and administrative expenses would be $7 per case. They expect that introducing this product will reduce current unit sales of the GenY product by 10%. What is the maximum variable cost per unit of the Gen Z product that would make this proposition worthwhile