What should the company establish as sales price per unit

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Reference no: EM132768853

Problem 1: What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.)

Problem 2: At the unit sales price computed in part a, how many units must the company produce and sell to break even? (Assume all units produced are sold.)

Problem 3: What will be the margin of safety (in dollars) if the company produces and sells 60,000 units at the sales price computed in part a?

Problem 4: Assume that the marketing manager thinks that the price of this product must be no higher than $60 to ensure market penetration. Will setting the sales price at $60 enable Ionic Charge to break even, given the plans to manufacture and sell 60,000 units?

Reference no: EM132768853

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