T$4\mathrm{.}1$ Kinsale Ltd$.$

Kinsale Ltd$.$ manufactures a single product that is marketed in three grades of finish $-$

Presentation, De Luxe and Standard. The variable cost of the basic unit is $6$ and the cost of

finishing and packing is as follows:

The Selling prices are:

The marketing manager has estimated demand in units for the year $204$ as follows:

The production manager has estimated the production capacity of the factory at $150,000$ units

per annum.

Fixed costs have been estimated at $100,000$ for the forthcoming year.

An enquiry has been received from a manufacturer, Green, who is considering using the basic

unit as a sub$-$assembly in his own product and, at an acceptable price, would be willing to

buy $30,000$ units a year.

The company's pre$-$tax profit objective is $300,000$ for $20x4.$

REQUIREMENT

Calculate the lowest price that could be quoted for the supply of the $30,000$ units to Green.

Comment upon any business policy matter you consider relevant in these circumstances.