Dripping Tap Co Currently Has Idle Plant Capacity and Wishes

Multiple Choice

Dripping Tap Co currently has idle plant capacity and wishes to make as large a profit as possible.It could use some of its facilities to produce 10 000 units of a new product that could be sold through its existing sales network.The new product would have the following $$\begin{array} { l c } \text { 1. estimated costs: } & \text { Per unit } \\\text { Materials } & \$ 8 \\\text { Labour } & 12 \\\text { Variable factory overhead } & 5 \\\text { Variable selling \& administrative costs } & 1\end{array}$$ Assume the fixed factory overhead for the plant is $10 000 per month and the fixed selling and administrative costs are $2000 per month.What is the minimum price that the firm could charge for this product without reducing overall profits?

A) $20
B) $25
C) $26
D) $60