Coed Novelties manufactures key chains for college bookstores. During 2003, the company had the following costs:

Direct materials used

Direct labor

Factory rent

Equipment deprecation - factory Equipment depreciation - office Marketing expense Administrative expenses

Sales (100,000 units) Variable costs Contribution margin Fixed costs

Net Income

$200,000 100,000 100,000 50,000 50,000 $ 31,000 18,000 12,000 

2,000 750

2,500 40,000

35,000 units produced were in 2003. What is the product cost per unit? a. approximately $1.24

b. $1.80

c. approximately $3.04 d. $1.40

e. approximately $1.82