Ornamental Glass S.A. is dedicated to the manufacture of plastic containers. The cost of the materials is $1 per container, and the workers who blow the plastic are paid a wage rate of $28 per hour. A blower makes 50 containers per hour. Fixed manufacturing costs for the containers are $28,000 per period or operating expenses. The period costs (other than manufacturing costs) associated with the containers are $10,000 per period and are fixed.

Suppose that Vidrios Ornamentales S.A. manufactures and sells 5,000 containers in this period. Your main competitor sells containers for $9 each. a. What is the unit cost of Ornamental Glass? b. Can you sell below that price and still make a profit on the containers? c. How would your answer differ if Ornamental Glass made and sold 10,000 containers during this period? What would your unit cost be in that case? d. Why? What does the use of unit cost in decision making indicate?