Sunland, Inc. produces a number of components that are used in home theater systems. Fred Briggs, head of the company's market research department, has identified the need for a new component that will most likely sell for $85. Projected volume levels are anticipated to reach 27,600 units in the first year, as several firmly entrenched competitors will be introducing a similar product in th not-too-distant future. Conversations with Sunland's engineers and reviews of cost accounting data related to similar products that the company manufactures resulted in the following cost estimates for the new component: Direct materials Direct labour $16 35 Manufacturing overhead 29 Selling and administrative 5 Sunland currently uses cost-plus pricing and adds a 20% markup on total production cost to arrive at what is normally a competitive selling price.