Garner Industries manufactures precision tools. The firm uses an activity$-$based costing system. CEO Deb Garner is very proud of the accuracy of the system in determining product costs. She noticed that since the installment of the ABC system $10$ years earlier, the firm had become much more competitive in all aspects of the business and earned an increasing amount of profits every year.

In the last two years, the firm sold $0\mathrm{.}628$ million units to $4,100$ customers each year. The manufacturing cost is $$500$ per unit. In addition, Garner has determined that the order$-$filling cost is $$35\mathrm{.}73$ per unit. The $$696\mathrm{.}00$ selling price per unit includes $16\%$ markup to cover administrative costs and profits.

The order$-$filling cost per unit is determined based on the firm$$s costs for order$-$filling activities. Order$-$filling capacity can be added in blocks of $60$ orders. Each block costs $$60,000.$ In addition, the firm incurs $$1,200$ order$-$filling costs per order.

Garner serves two types of customers designated as PC $($Preferred Customer$)$ and SC $($Small Customer$).$ Each of the $100$ PCs buys, on average, $5,000$ units in two orders. The firm also sells $128,000$ units to $1,000$ SCs$.$ On average each SC buys $128$ units in $10$ orders. Ed Cheap, a buyer for one PC$,$ complains about the high price he is paying. Cheap claims that he has been offered a price of $$600$ per unit and threatens to take his business elsewhere. Garner does not give in because the $$600$ price Cheap demands is below cost. Besides, she has recently raised the price to SC to $$671\mathrm{.}88$ per unit and experienced no decline in orders.

Required:

Demonstrate how Garner arrives at the $$35\mathrm{.}73$ order$-$filling cost per unit $($done$)$

$2.$ What would be the amount of loss $($profit$)$ per unit if Garner sells to Cheap at $$600$ per unit?

$3.$ What is the amount of loss $($profit$)$ per unit at the $$671\mathrm{.}88$ selling price per unit for units sold to SC$?$

$2.$ What would be the amount of loss $($profit$)$ per unit if Garner sells to Cheap at $$600$ per unit?

$3.$ What is the amount of loss $($profit$)$ per unit at the $$671\mathrm{.}88$ selling price per unit for units sold to SC$?$