Picazon manufactures guitar stands for Guitar Hero and Rockband. They began operations in 2019 and sold #731,000 units in their first year. The units are sold to seven retailers for $10 each. During 2020 there were two large customers who each ordered and were each shipped #175,000 units in 2020. The average order size for the other customers was #40,000 units in 2008. Thus the total units sold was #550,000. Picazon Ltd. has the capacity to produce up to #1,300,000 units per year with its current facility. Balance Sheet as at December 31, 2019 Inventory = $2,100,000 Excerpts from the income statement for the year ended December 31, 2020 300,000 Manufacturing costs ($) Labour Materials Insurance Equipment Building Utilities Total 700,000 1,400,000 380,000 2,000,000 900,000 220,000 $5,600,000 Inventory Opening Production Sold Ending During 2008 Picazon manufactured #700,000 guitar stands. At the end of 2020 they had #450,000 units in inventory. PICAZON Variable cost of one guitar stand is $8 $7.49 O $6.17 $7.70