Waterway is the creator of Y-Go, a technology that weaves silver into fabrics to kill bacteria and odour on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,000,000 Y-Go undergarments each year. The per-unit and total costs for the undergarment are as follows: Per Undergarment Total Direct materials $1.75 $1,750,000 Direct labour 0.50 500,000 Variable manufacturing overhead 1.35 1,350,000 Fixed manufacturing overhead 1.45 1,450,000 Variable selling expenses 0.25 250,000 Total $5.30 $5,300,000