Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $870 whereas the competition's comparable chair was selling for $735. Winters determined that a price drop to $735 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.

Cost data based on sales of 10,000 chairs: Direct materials (board feet) 89,600 81,100 $1,258,000 Dir'ect labor' (hours) 72,150 74,575 876,600 Machine hour's (hours) 12,200 12,050 251,600 Finishing and packing (hour's) 7,300 7,200 126,600 The current profit per unit is