TwoShaft Inc. manufactures a wide variety of parts for recreational boating, including boat engines. The component is purchased by OEM (Original Equipment Manufacturers) such as Mercury and Honda, for use in the larger and more powerful outboards. The units sell for $660, and sales volume averages 32,000 units per year. Recently, TwoShaft's major competitor lowered the price of the equivalent part to $590. The market was very competitive, and TwoShaft realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year: Cost and Usage for Production of 32,000 Units Standard Cost Actual Quantity Actual Cost Materials $ 6,656,000 $ 7,136,000 Direct labor 2,272,000 2,176,000 Indirect labor 3,264,000 3,072,000 Inspection (hours) 2,600 546,000 Materials handling (number of purchases) 73,000 401,500 Machine setups 4,600 1,504,200 Returns and rework (number of times) 700 95,900 Total $ 14,931,600

The target cost for maintaining current market share and profitability is (round to nearest cent):

Answer could be: $396.61.

$460.61.

$417.12.

$466.61.

$390.61.