Unit Manufacturing and Marketing Costs: ()

Direct Materials 110

Direct Labor 150

Variable Manufacturing Overhead 50

Fixed Manufacturing Overhead 120

Variable Marketing Costs 50

Fixed Marketing Costs 140

. The firm has 2300 units of an obsolete model. These must be sold through regular channels (thus incurring the normal variable marketing costs) at reduced prices, or the inventory will be worthless soon. Assume that every two obsolete units sold will displace the sale of one unit of the current model. What is the minimum acceptable price for these units?

Is 50 the minimum price despite a price displacement?