Office Oulet LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the printing business in the region where Office Depot is located is extremely competitive. More than 100 printing shops are all competing for the same business.

The company currently manufactures one type of high-quality printer with the average unit selling prices, unit variable costs, and direct fixed costs are as follows:

Budgeted Costs 5 Unit Sales Price 5,000 Direct Labour / Unit 1,386 Direct Materials / Unit 1,433 Variable Mfg. OH / Unit 1,195 Depreciation 150,000 Insurance Expense 50,000 Salaries Expense 10,000 Rent Expense 15,000