The marketing manager of Thornton Corporation has determined that a market exists for a telephone with a sales price of $20 per unit. The production manager estimates the annual fixed costs of producing between 41,900 and 80,400 telephones would be $196,800.

Required:

Assume that Thornton desires to earn a $128,000 profit from the phone sales. How much can Thornton afford to spend on variable cost per unit if production and sales equal 46,400 phones?