Marquette Manufacturing produces “invisible” electric dog fences, sold through retail locations nationwide. The selling price of the fence is $150 per unit. The cost to manufacture and market the fences is shown below. These figures represent the cost at the company’s normal volume of 3,000 units per month.
At the end of the year the production manager is taking inventory and finds 600 units of an older model of invisible fencing that the company no longer manufactures. These obsolete units can be disposed of through their regular channels, thereby incurring variable marketing expenses. What is the lowest price that they should accept for these obsolete units, realizing that if they do not sell them these units will have to be thrown away. (Show all supporting calculations).
