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High Frequency manufactures and sells MP-3 players. Information on last year’s operations (sales and production of the 2010 model) follows.

Sales price per unit ....... $70

Costs per unit

Direct material ......... $16

Direct labor ........... 14

Overhead (50% variable) ..... 12

Selling costs (40% variable) .... 15

Production in units ........ 10,000

Sales in units ........... 9,500

At this time (April 2011), the 2011 model is in production and it renders the 2010 model obsolete. If the remaining 500 units of the 2010 model MP-3 players are to be sold through regular channels, what is the minimum price the company would accept for the radios?

Sales price per unit ....... $70

Costs per unit

Direct material ......... $16

Direct labor ........... 14

Overhead (50% variable) ..... 12

Selling costs (40% variable) .... 15

Production in units ........ 10,000

Sales in units ........... 9,500

At this time (April 2011), the 2011 model is in production and it renders the 2010 model obsolete. If the remaining 500 units of the 2010 model MP-3 players are to be sold through regular channels, what is the minimum price the company would accept for the radios?

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