Many luxury sheets cost less than $200 to make but sell for more than $500 in retail stores. Some cost even more --- consumers pay almost $3,000 for Frett'e "Tangeri Pizzo" king-size luxury linens. The creators of a new brand of luxury linens, called Boll & Branch, have entered this market and are determining the price at which to sell their sheets directly to consumers online. They want to price their sheets lower than most brands but still want to earn an adequate margin on sales. The sheets come in a luxurious box that can be reused to store lingerie, jewelry, or other keepsakes. The Boll & Branch brand touts fair trade practices when sourcing its high-grade long-staple organic cotton from India. Given the cost per king-size sheet set below, and assuming the manufacturer has total fixed costs of $630,000 and estimates first year sales will be 30,000 sets, determine the price to consumers if the company desires a 40 percent margin on sales.

1. The variable cost is $____ (Round to the nearest dollar.)

2. Find the cost per unit. The Unit Cost is $____ (Round to the nearest dollar.)

3. Find the markup price so that the company earns 40% profit on sales. The markup price is $____ (Round to the nearest dollar.)

Raw Cotton Spinning/Weaving/Dyeing Cut/Sew/Finishing Material Transportation Factory Fee Inspection and Import Fees Ocean Freight/Insurance Warehousing Packaging Promotion Customer Shipping Cost/King-size Set $23.00 $14.00 $11.00 $5.00 $20.00 $20.00 $2.00 $7.00 $12.00 $27.00 $12.00