Auto Glass Company (AGC) manufactures and sells windshield products. AGC entered into a one-time contract to produce an additional 1,000 windshields for the local public transit authority, at a price of "cost plus 20%." The company has a plant with a capacity of 9,000 units per year, but normal production is 4,000 units per year. The annual costs to pro- duce those 4,000 units are as follows:

After completing half of the order, the company billed the authority for $138,000. However, the transit authority's purchasing agent then called the president of AGC to dispute the invoice. The purchasing agent stated that the invoice should have been for $96,000.
Instructions
(a) Calculate the components of the "total-cost" unit price charged to the transit authority, as determined by AGC.
(b) Calculate the components of the "variable manufacturing cost" unit price that should have been charged, as deter- mined by the transit authority's purchasing agent.
(c) What price per unit would you recommend? Explain your reasoning.

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Materials Labour Supplies and other variable manufacturing indirect costs Fixed indirect costs (allocated based on normal capacity) Variable marketing costs Administrative costs (all fixed) $200,000 320,000 120,000 160,000 40,000 80,000