Aquamarine Company Sells One of Its Products, Product X, for $50

Multiple Choice

Aquamarine Company sells one of its products, Product X, for $50 each. Sales volume averages 5,000 units per year. Recently, its main competitor reduced the price of its product to $30. Aquamarine expects sales to drop dramatically unless it matches the price offered by its competitor. In addition, the current profit per unit must be maintained. Information about Product X (for production of 5,000 units) follows: $$\begin{array} { l r r r } & \begin{array} { c } \text { Standard } \\\text { Quantity }\end{array} & \begin{array} { c } \text { Actual } \\\text { Quantity }\end{array} &{ \begin{array} { c } \text { Actual } \\\text { Cost }\end{array} } \\\text { Materials (pounds) } & 8,500 & 10,000 & 25,000 \\\text { Labor (hours) } & 2,000 & 2,500 & 12,000 \\\text { Setups (hours) } & 0 & 2,000 & 4,000 \\\text { Material handling (moves) } & 0 & 1,000 & 2,500 \\\text { Warranties (number repaired) } & 0 & 500 & 8,000\end{array}$$
The non-value-added cost per unit is (Round answer to two decimal places.) :

A) $3.17.
B) $4.50.
C) $4.13.
D) $3.80.