Detailed Answer
Answer (C) is correct. To determine the minimum price per unit, while at full capacity, the differential costs must be found. The total cost of producing 12,000 units is $2,760,000 {(12,000 units × $205 variable cost) + [(10,000 units × $25 fixed cost) × 1.2]}. Thus, the total differential cost is $460,000 ($2,760,000 – $2,300,000), and the unit differential cost is $230 ($460,000 ÷ 2,000 units).