Net sales for the year were $325,000 and cost of goods sold was $240,500 for the companys existing products. A new product is presently under development and has an expected selling price of $40 per unit in order to remain competitive with similar products in the marketplace.

What is the maximum cost per unit that can be incurred to manufacture the new product such that the product can be priced at $40 per unit and will not result in a reduction to the companys gross profit ratio?

a) $20.00

b) $40.00

c) $10.40

d) $29.60