John's Outside manufactures patio furniture. The cost accounting system estimates manufacturing costs to be $270 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is John's Outside's policy to add a 50% markup to full costs.

A large hotel chain is currently expanding and has decided to decorate all new hotels using the patio furniture. John's Outside is invited to submit a bid to the hotel chain. What per unit price will John's Outside most likely bid on this long-term order?

a.

$86.40 per unit

b.

$405.00 per unit

c.

$345.60 per unit

d.

$432.00 per unit