Irish Products makes wheels for a variety of toys and sports equipment. Irish Products sells the wheels to manufacturers who assemble and sell the toys and equipment. The company’s market research department has discovered a market for wheels for in-line skates, which Irish Products currently does not produce. The market research department has indicated that a set of four wheels for in-line skates would likely sell for $6.
Assume the company desires an operating profit of 20 percent. What is the highest acceptable manufacturing cost for Irish Products to produce the sets of wheels?