Jorell, Inc., manufactures and distributes a variety of labelers. Annual production of labelers averages $410,000$ units. A large chain store purchases about $30$ percent of Jorell's production. Several thousand independent retail office supply stores purchase the other $70$ percent. Jorell incurs the following costs of production per labeler:

Direct materials $$9\mathrm{.}05$

Direct labor $2\mathrm{.}45$

Overhead $3\mathrm{.}50$

Total $$15\mathrm{.}00$

Jorell has two salespeople assigned to the chain store account at a cost of $$59,800$ each per year. Delivery is made in $1,500$ unit batches about three times a month at a delivery cost of $$720$ per batch. Eight salespeople service the remaining accounts. They call on the stores and incur salary and mileage expenses of approximately $$39,200$ each. Delivery costs vary from store to store, averaging $$0\mathrm{.}57$ per unit.

Jorell charges the chain store $$17\mathrm{.}35$ per labeler and the independent office supply stores $$20\mathrm{.}75$ per labeler.

Required:

Is Jorell's pricing policy supported by cost differences in serving the two different classes of customer? Support your answer with relevant calculations. $($Round unit costs to the nearest cent.$)$

$,$ the cost differential of

does not

justify the price differential of $$3\mathrm{.}40.$