Dyggur Traders wishes to earn a 20% return on its $100,000 investment in equipment used to produce dog toys. The fixed costs cannot be changed, but the company wants to set a target cost for the variable portion. Based on estimated sales of 10,000 toys next year, the price and fixed costs per unit are:

Price: $9.00

Fixed selling and administrative costs: $2.00

Fixed manufacturing cost: $1.00

What is the target variable cost per unit?