Activity-Based Customer-Driven Costs

Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter:

	JIT Distributors		Non-JIT Distributors
Sales orders	800		80
Sales calls	70		70
Service calls	350		175
Average order size	550		5,500
Manufacturing cost/unit	$125		$125
Customer costs:
Processing sales orders	$3,080,000
Selling goods	1,120,000
Servicing goods	1,050,000
Total	$5,250,000

For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent.

$ _____ per unit

PLEASE EXPLAIN ANSWER.