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Part 1

Many luxury sheets cost less than $200 to make but sell for more than $500 in retail stores. Some cost even more

consumers pay almost $3,000 for Frett'e "Tangeri Pizzo" king-size luxury linens. The creators of a new brand of luxury linens, called Boll & Branch, have entered this market and are determining the price at which to sell their sheets directly to consumers online. They want to price their sheets lower than most brands but still want to earn an adequate margin on sales. The sheets come in a luxurious box that can be reused to store lingerie, jewelry, or other keepsakes. The Boll & Branch brand touts fair trade practices when sourcing its high-grade long-staple organic cotton from India. Given the cost per king-size sheet set below, and assuming the manufacturer has total fixed costs of

$360,000

and estimates first year sales will be

40,000

sets, determine the price to consumers if the company desires a

30

percent margin on sales.

The variable cost is_____

(Round to the nearest dollar.)