When introducing new products, its usually not easy to determine at what price it should be offered. At the very least, however, a marketer must understand the costs associated with producing the product and set the price at some level above those costs. For example, suppose that a manufacturer of lawn mowers incurs a cost of $75 for each mower it produces and that it produces a total of 1 million mowers each year. Fixed cost for this company are $5 million.

1. What is the unit cost for each mower this company produces?

2. If the manufacturer desires a markup of 60 percent on sales, at what price should this product be sold to a reseller such as a wholesaler or distributor?