Newton Industries (NI) makes baby diapers. During the most recent accounting period, NI paid $90,000 for raw materials, $78,000 for labor, and $82,000 for overhead costs that were incurred to start and complete 125,000 boxes of diapers. General selling and administrative expenses amounted to $120,000.
Assuming NI desires is to earn a gross profit that is equal to 60 percent of the product cost. The selling price per box of diapers should be
1. $20
2. $2.60
3. $3.00
4. $3.20