Preferred customer and the customer is charged at cost

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An apparel manufacturing plant has estimated the variable cost to be $4.50 per unit. Fixed costs are $500,000 per year. Forty percent of its business is with one preferred customer and the customer is charged at cost. The remaining 60% of the business is with several different customers who are charged $40 per unit.

If 150,000 total units are sold in a year, compute the unit cost per item.

$7.83

$11.23

$3.33

$23.92

Reference no: EM13800515

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