RY Company produces and sells ice cream for an average of $4.00 per quart. RY's relevant production and selling costs per quart are:

$2.00 Direct Materials

$0.50 Direct Labor

$0.25 Variable Manufacturing Overhead

$0.25 Variable Selling Expenses

$3.00 per quart Total

A local city has asked RY if he would sell them 400 quarts of ice cream for a special town picnic at a price of $3.50 per quart. The town told RY that they will not accept a partial order and that they need him to provide all 400 quarts of the ice cream. RY has only enough capacity to produce an additional 200 quarts of ice cream. The Variable Selling Expenses relate to sales commissions that would be avoided if he takes the order since the town contacted RY directly. What is the lowest price per quart that RY would be willing to accept for the total special order of 400 quarts?