Ramanan, Inc., has performed cost studies and projected the following annual costs based on 200,000 units of production and sales:

Total Annual Costs (200,000 units)

Direct Material .............................................................................. $ 400,000

Direct Labor..................................................................................... 360,000

Manufacturing Overhead................................................................. 300,000

Selling, General, and Administrative............................................... 200,000

Total............................................................................................. $1,260,000

a. Compute Ramanan’s unit selling price that will yield a profit of $300,000, given sales of 200,000 units.

b. Assume management selects a selling price of $8 per unit. Compute Ramanan’s dollar sales that will yield a projected 20 percent profit on sales, assuming variable costs per unit are 60 percent of the selling price per unit and fixed costs are $420,000.