In the year just ended, a small appliance manufacturer sold its griddle at the wholesale price of $37.50. The unit variable costs were $13.25, and the monthly fixed costs were $5600.
a. If unit variable costs are expected to rise to $15.00 and fixed costs to $6000 per month for the next year, at what amount should the griddle be priced in order to have the same break-even volume as last year?
b. What should be the griddle’s price in order to have the same profit as last year on sales of 300 griddles per month in both years?