Salvay Company is a small manufacturer that produces and selis one product for use in medical instruments. Demand is erratic and can vary widely from year to year. The financial managers at Salvay are planning for the coming year and have asked for your help in forecasting unit costs and gross margin. Stacey Choo, the cost accountant at Salvay. provides you with information about the components of manufacturing costs along with specifying the behavior of the components. This information is summarized in the memo on the next page. Stacey also tells you that the company has a zero-inventory policy and all projections are made under that assumption. Finally. she points out that capacity constraints require assuming a second shift for the year if annual production volume exceeds 600,000 units The marketing manager tells you that the best estimate of the price of the product is $20 per unit. His best guess is that. demand could be as low as 500.000 units or as high as 750.000 units. Salvay Company Memo: To. Jorge Alcala, Controller From: Stacey Choo, Cost Accountant Date, November 3 . Subject: Cost Information Projections As you requested, the following table summarizes our best estimates for manufacturing costs for the upcoming fiscal year: These estimates are valid for any reasonable range of production. margins They are especially interested in the effection for the CFO and Controllerat Salvay discussing the estimated gioss mentions that both manage's like to see visual suppoce foc any conel cost items on the gross margins Stacey also