Problem 4 (6 points) Benny Corporation developed a software product. Sales have been good at 50,000 units a month, but the company has been losing money as shown below: 1,250,000 300,000 950,000 960,000 S10000) Sales (50,000 units x $25 per unit) Variable cost (50,000 units x $6 per unit) Contribution margin Fixed expenses Net operating loss The company's variable cost is the $6 fee it pays to another company to produce the software for download Monthlyfixed selling and administrative expenses are $960,000 The company's marketing manager has been arguing for some time that the software is priced too high. She estimates that every 5% decrease in price would yield an 8% increase in unit sales. The marketing manager would like your help in preparing a presentation to the company's owners concerning the pricing issue Required: Show all work. (3 points each; total 6 points) 1. Given the data provided by the Benny Corporation marketing manager, what price do you recommend that Benny Corporation charge to maximize its profits assuming that the company considers the price elasticity of demand when determining its product prices? To answer this question, first calculate the price elasticity of demand. Then, compute the price 2. The owners have invested $2,700,000 in the company and feel that they should be earning at least 2% per month on their investment before taxes. Suppose your recommended selling price would result in projected sales of 85,000 units per month. Would the owner's objective be achieved? Explain why or why not and what the target selling price would have to be to achieve the owner's objective if your recommended price per unit would not generate sufficient operating income before taxes