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 $790 whereas the competition's comparable chair was selling for $675. Winters determined that a price drop to $675 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.

Cost data based on sales of10,000 chairs: Direct materials (board feet) 89,200 80,700 $1,256,000 Direct labor (hours) 71,950 74,375 876,200 Machine hours (hours) 12,000 11,850 251,200 Finishing and packing (hours) 7,100 7,000 126,200 If the profit per unit is maintained, the target cost per unit is