Analyzing change in sales price using the contribution margin ratio Kaito Company reported the following data regarding the one product it sells:

Required
Use the equation method and consider each requirement separately.
a. If the sales price is set at $48, how many units must Salazar sell to break even?
b. Salazar estimates that sales will probably be 6,000 units. What sales price per unit will allow the company to break even?
c. Salazar has decided to advertise the product heavily and has set the sales price at $54. If sales are 9,000 units, how much can the company spend on advertising and still break even?

Transcribed Image Text:

Sales price Contribution margin ratio Fixed costs $16 20% $360,000 per year