Indirect Profit = Lower Unit Cost Due to Contract x Non-contract Unit Sales

		Projections
Unit sales without the contract	250,000	Unit cost without the contract	$20.66
Contract units	50,000	Unit cost with the contract	$20.38

3. Using your results from questions 1 and 2, what is the total impact of the $20.00 bid on profit?

$20.38 - $20.00= $0.38* $50,000= $19,000 (Anticipated loss)

Reduction in the unit cost due to the contract = (20.66 - 20.38) = $ 0.28

Indirect profit = $ 0.28 X 250,000 = $ 70,000