PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product B. Fixed costs are $800,000 per annum.

PL currently earns an annual contribution of $2,880,000 from the sale of 90,000 units of product B. Fixed costs are $800,000 per annum.

The estimated variable costs per unit at either of the higher levels of demand and the probabilities of them occurring are as follows:

Variable cost (per unit)              probability

       $21                                          0.25

       $19                                          0.75

Calculate