The salespeople at Buffalo, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. John, the operations supervisor, leaked the $1.15 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. John knew the current year's operating capacity was two million notebooks, and Buffalo produced and sold just that many. The detailed breakdown of the $1.15 total unit cost is as follows. Direct material $0.10 Direct labor 0.20 Variable overhead 0.05 Fixed overhead 0.80 Total cost per unit $1.15 (a) What were Buffalo's total fixed costs? If the average selling price was $1.80, how much gross margin did the company generate? (b) Total fixed costs Gross margin eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer