Lethal Industries has recently patented a new product called MaxiDrive, an automobile oil for maximum engine performance. The following annual information was developed by the company's controller for use in price determination: Variable production costs $1,860,000 Fixed overhead 620,000 Selling expenses 420,000 General and administrative expenses 230,000 Desired profit 342,000 Annual demand for the product is expected to be 500,000 quarts. Round answers to nearest two decimal places.

a. Compute the projected unit cost for one quart of MaxiDrive

b. Prepare the formulas for computing the markup percentage and the selling price for one quart using the gross margin pricing method.