Hewtex Electronics manufactures two products, tape recorders and electronic calculators, and sells them nationally to wholesalers and retailers. The Hewtex management is very pleased with the company's performance for the current fiscal year. Projected sales through December 31, 2022, suggest that 120,000 tape recorders and 190,000 electronic calculators will be sold this year. The projected earnings statement, which follows, shows that Hewtex will not meet its earnings goal of 9% of sales after taxes. HEWTEX ELECTRONICS Projected Earnings Statement For the Year Ended December 31, 2022 120,000 UNITS Total Amount 190,000 UNITS TAPE RECORDERS ELECTRONIC CALCULATOR TOTAL Per Unit Total Amount Per Unit (000 omitted) (000 omitted) (000 omitted) Sales $1,800 $15.00 $5,320 $28.00 $7,120 Flexible costs Materials Labour 480 4.00 1,140 6.00 1,620 360 3.00 1,710 9.00 2,070 Other 120 1.00 570 3.00 690 Committed costs 280 2.33 1,400 7.37 1,680 Total costs 1,240 10.33 4,820 25.37 6,060 Gross Margin 560 4.67 500 2.63 1,060 Facility-sustaining costs 2,000 Net income before income taxes (940)