Problem 8-1 Determining the Profit-Maximizing Price, Spencer Electronics has just developed a low-end electronic calendar that it plans to sell via a cable channel marketing program. A fee is charged by the cable company for selling the item, for which the program will sell the calendar over six 10-minute segments in September. The company plans to wait for all orders to come in, then it will produce exactly the number of units ordered. Production time will be less than three weeks. Spencer has provided the following cost information: Fee charged by cable company for selling items 20% of sales price Fixed costs per production run $ 160,000 Variable production costs per unit $ 28.00 Shipping cost per unit to customers $ 5.00 Marsha Andersen, a product manager at Spencer, is charged with recommending a price for the item. Based on her experience with similar items, focus group responses, and survey information, she has estimated the number of units that can be sold at various prices: Price per unit Quantity $85 $75 $65 $55 $45 15,000 20,000 30,000 45,000 65,000 Required a. Calculate expected profit for each price. The fee for cable is a variable cost. Total Variable Price per Costs per CMUnit (C-D) Total CM (B*E) Fixed Costs Quantity unit unit Profit b. Which price per unit maximizes company profit? Explain why