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Sue Bee Honey is one of the largest processors of its product for the retail market. Assume that one of its plants has annual fixed costs totaling $4,800,000, of which $1,800,000 is for administrative and selling efforts. Sales are anticipated to be 800,000 cases a year. Variable costs for processing are $12 per case, and variable selling expenses are 25 percent of selling price. There are no variable administrative expenses.
Problem 1: If the company desires a profit of $3,000,000, what is the selling price per case?
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