=+7-15 K Short-run pricing, capacity constraints OBJECTIVE 6 Organix Dairy, maker of specialty cheeses, produces a soft cheese from the milk of dairy cows raised on a special corn-based diet. One kilogram of Organix soft cheese, which has a contribution margin of $8, requires 4 litres of milk. A well-known gourmet restaurant has asked Organix Dairy to produce 2000 kilograms of a hard cheese (to be branded Supreme Gourmet) from the same milk. Knowing that the dairy has sufficient unused capacity, Angela Stonley, owner of Organix Dairy, calculates the costs of making one kilogram of the desired hard cheese:

Milk (10 litres × $1.50 per litre) $15 Variable direct manufacturing labour 5 Variable manufacturing overhead 3 Fixed manufacturing cost allocated 6 Total manufacturing cost $29 Required 1 Suppose Organix Dairy can acquire all the special milk that it needs. What is the minimum price per kilogram it should charge for the hard cheese?