Analyzing sales price and fixed cost using the equation method Salazar Company is analyzing whether its new product will be profitable. The following data are provided for analysis:

The company has decided that any new product must at least break even in the first year.
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 breakeven?

Expected variable cost of manufacturing Expected fixed manufacturing costs Expected sales commission Expected fixed administrative costs $30 per unit $48,000 per year per unit $12,000 per year