the same alternatives management faced during the first six months of the year. These figures represent the number of units the firm believes it could sell at the listed array of prices. Household Commercial Alterative Prices per Unit Sales Alterative Prices per Unit Sales Unit Volume Unit Volume $18 120,000 $25 175,000 $20 100.000 $27 140,000 $21 90,000 $30 100,000 $22 80,000 $32 55,000 $23 50,000 535 35.000 Top management believes the company's loss for the first six months of the year reflects a tight profit margin caused by intense competition. Management also believes that many companies will be forced out of the market by the next year and that long-term profits should improve. Other information: Fixed manufacturing overhead per unit is based on normal manufacturing capacity. Depreciation constitutes 50% of the fixed manufacturing overhead cost of each product and is unavoidable. The remaining fixed manufacturing overhead expenses arise from factory personnel assigned to particular products and can be avoided if that product is discontinued. Variable selling and administrative expenses are $4 and $7 per unit, respectively, for the Household and Commercial products. Required: 1. What unit selling price should Whirlwind Industries assign to each of the Karpet Kleen products to maximize net income for the second six months of the year? Support your answers with calculations. (Hint: Which price/volume combination results in the highest total contribution margin for each product?) 2. Based on the unit prices you have chosen in part (1), what is the company's expected net income before taxes for the second six months of the year? Support your answer with a contribution margin format income statement. Show the contribution margin and segment margin for each product. 3. Based on the unit prices you have chosen in part (1), should the Household product be dropped for the second six months of the year? Support your answer. 4. Continuing with the unit prices and volumes from part (1): Management has received a special order from CleanMe Corporation for 80,000 cases of the Commercial product at a price of $20/case. No sales commission would need to be paid for this special order (sales commissions are normally $3.20 per case). Remember the maximum capacity of commercial for the second half of the year is only 175,000 units. So, if the firm accepts