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Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves at the company's normal volume of 6,000 units per month are shown in the following table.
Unit manufacturing costs
Variable materials$51Variable labor 76Variable overhead 26Fixed overhead 61Total unit manufacturing costs $214Unit marketing costsVariable 26Fixed 71Total unit marketing costs 97Total unit costs $311
Problem a. An inventory of 460 units of an obsolete model of the stove remains in the stockroom. These must be sold through regular channels (thus incurring variable marketing costs) at reduced prices or the inventory will soon be valueless. What is the minimum acceptable selling price for these units?
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