Exercise $3-8$A $($Algo$)$ Target costing LO $3-2$

The marketing manager of Franklin Corporation has determined that a market exists for a telephone with a sales price of $$20$ per unit. The production manager estimates the annual fixed costs of producing between $41,000$ and $81,600$ telephones would be $$252,200.$

Required

Assume that Franklin desires to earn a $$127,000$ profit from the phone sales. How much can Franklin afford to spend on variable cost per unit if production and sales equal $47,400$ phones?

Variable cost per unit