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A firm incurs $16.7 per shovel in variable raw material costs and $18.15 per shovel in variable labor costs. The shovels sell for $113 apiece.

A firm incurs $16.7 per shovel in variable raw material costs and $18.15 per shovel in variable labor costs. The shovels sell for $113 apiece. The firm produces 170,000 shovels at fixed costs of $730,000.

a. What is the average cost per shovel?

b. Find the minimum acceptable additional revenue from a new order of 13,000 shovels. (In other words, what should be the minimum additional revenue resulting from the new order for it to be acceptable?)

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