Calculate the total variable costs per active wear unit. (Hint - Exhibit 9 provides Direct and Indirect variable costs. See page 7 of the case for the indirect variable costs. These have to be added per Exhibit 9).

Direct variable costs: \begin{tabular}{cl} \multicolumn{2}{c}{ Pants } \\ \hline$ & \\ $ & \\ $ & \\ $ & \\ $ & \\ \hline$ & \end{tabular} Direct variable costs translated into "unit" costa Indirect variable costs: b Wholesale "unit" price Total variable costs as \% of wholesale price Indirect variable costs per "unit" \begin{tabular}{lll} $ & & \\ & % & \\ \hline & \end{tabular} Direct variable costs per "unit" Indirect variable costs per "unit" Total variable costs per "unit" \begin{tabular}{ll} $ & \\ $ & \\ \hline$ & \\ \hline \hline \end{tabular} Allen had also run some numbers on variable costs. Direct labor of sewing, pressing, and cutting had to be considered. Raw material costs were broken out into fabric and findings (e.g., buttons, zippers, and thread). Allen's estimates are summarized in Exhibit 8. Allen projected working capital requirements at 3% of wholesale prices and sales commissions at 4%. She expected carrying costs for inventory to be 1% of wholesale prices. Other expenses that Allen estimated were bad debt at .7% of wholesale prices, transportation at .24% and order processing/miscellaneous at .15%. Vigor would be able to leverage Harrington's existing corporate support functions (e.g., IT, HR, Legal, Finance, etc.) to run the new business, but Vigor would have to hire a general manager, merchant, planning manager, and two design staff members who were dedicated to the new product line. These management salaries and support allocations were estimated at $1 million per year