Bench Industries manufactures large workbenches for industrial use. Recent market

analysis indicates that sales are declining for Bench's product because of aggressive competitor

pricing. Bench's workbench sells for $$800$ per unit compared to the competition's comparable

workbench sells for $$700.$ Bench's marketing department determined that a price drop to $$700$

would be necessary to retain market share and continue with annual sales of $14,000$ workbenches.

The following data are for sales of $14,000$ workbenches:

Direct materials $$3,563,000$

Direct labor $$975,000$

Variable Overhead $$400,000$

Fixed Overhead $$3,910,000$

a$.$ What is the current operating income as a percentage of revenue?

b$.$ If Bench Industries intends to maintain the same operating income percentage of revenue and

lowers the price to $$700$ what is the target cost per unit?