Using product cost data Baxter Electronics manufactures components for the aerospace industry. The company evaluates the price of each product every year according to company policy. The firm attempts to price competitively low, but not to sell at a nonprofitable price. The desired price for products provides a 35 percent gross margin on sales although competition sometimes forces less profitable prices. The minimum acceptable gross margin is 25 percent.

One of the company's largest selling products, a turbine temperature gauge, should have its price reevaluated based on production costs of the past year. The current selling price is $100. Below are cost data for the 3 production runs during the past year.

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Job Number Date Completed Units Produced Material Unit Costs Labor Total Overhead Cost 6120 03/12/92 2,000 $ 50,000 $ 60,000 7115 06/01/92 3,000 80,000 90,000 $ 20,000 35,000 $130,000 205,000 8930 09/03/92 4,000 100,000 130,000 60,000 290,000 Totals 9,000 $230,000 $280,000 $115,000 $625,000