Hardy Fibre is the creator of Y-Go, a technology that weaves silver into fabrics to kill bacteria and odour on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,091,000 Y-Go undergarments each year. The per-unit and total costs for the undergarment are as follows: Per Unde Total Direct materials Direct labour Variable manufactuing overhead Fixed manufacturing overhead Variable selling expenses Total $2.00 0.75 0.85 1.30 0.30 $5.20 $2,182,000 818,250 927,350 1,418,300 327,300 $5,673,200 The Canadian Armed Forces (CAF) has approached Hardy Fibre and expressed an interest in purchasing 223,000 Y-Go undergarments for soldiers stationed in extremely warm climates. The CAF would pay the unit cost for direct materials, direct labour, and variable manufacturing overhead costs. In addition, the CAF has agreed to pay an additional $1 per undergarment to cover all other costs and provide a profit. Presently, Hardy Fibre is operating at 75% capacity and does not have any other potential buyers for Y-Go. If Hardy Fibre accepts the CAF's offer, it will not incur any variable selling expenses for this order