You are a factory manager at Widgets Inc. Your current cost structure (labor, materials, overhead, and SGA) is represented below. It is your job to decide whether or not to purchase a new widget-making machine. This machine will reduce labor by 20 percent, but will add $1.50 in tooling costs.

Labor $7.00

Materials $4.50

Mfg. Overhead 180% of Labor

SGA 20% of Factory Cost

What is the factory cost of producing a widget if you DO decide to buy the new machine? (round to the nearest 1/100th)

$21.68

$25.70

$25.71

$24.82