Drill Quest,Inc $Q = 1,200 - 0.05 P$ Use the MR = SMC Approach to Finding the Profit-Maximizing

Drill Quest,Inc.manufactures drill bits for the oil industry.Drill Quest uses cost-plus pricing to set the price of its bits.Currently Drill Quest applies a 50 percent markup on average total cost.Average variable cost of producing bits is constant and equal to $6,000 per bit.Total fixed cost at Drill Quest is $550,000.DrillQuest currently produces 690 bits.Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits) : $Q = 1,200 - 0.05 P$ Use the MR = SMC approach to finding the profit-maximizing point on the demand for Drill Quest's bits.The profit-maximizing price to charge is $___________ per bit.

A) $15,000
B) $12,500
C) $10,378
D) $10,245
E) $10,000