=+Lee: Well, there’s the rub. The product cost looks as ifit’s going to come in at around $2,400.

With a 25% markup, that will give us a selling price of $3,000.

Theo: I see your concern. That’s a little high. Our research indicates that computer prices are dropping by about 20 ^ per year and that this type of computer should be selling for around

$2,500 when we release it to the market.

Lee: I’m not sure what to do.

Theo: Let me see if I can help. How much ofthe $2,400 is fixed cost?

Lee: About $400.