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Smith and Company manufacture one inch drills which sell for $15 per unit in the wholesale market. Last year they manufactured and sold 5000 units

Smith and Company manufacture one inch drills which sell for $15 per unit in the wholesale market. Last year they manufactured and sold 5000 units and incurred the following cost:

Direct materials........................$25,000

Direct labor................................$17,500

Indirect materials......................$9,000

Manufacturing overhead... $16,000

It is Top management policy to maintain the present gross margin percentage. What price should the company charge for its one inch drill if sales are expected to go up to 7000units and $9600 of Manufacturing overhead is fixed.

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