. Stay Safe 12:30 PM 33%O Done CVP problems Problem 3A Setting Sales Price and Computing the Break-Even Point Barnie, Inc. is a newly organized manufacturing business that plans to manufacture and sell 100,000 units per year of a new product. The following estimates have been made of the company's costs and expenses (other than income taxes): $50 Variable Fixed per Unit Manufacturing costs: Direct materials Direct labor 40 Manufacturing overhead Period expenses: Selling expenses Administrative expenses 400.000 Totals $1.000.000 $125 $ 600,000 10 25 Instructions a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $400,000 by producing and selling 100,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.) b. At the unit sales price computed in part a, how many units must the company produce and sell to break even? (Assume all units produced are sold.) c. What will be the margin of safety (in dollars) if the company produces and sells 100,000 units at the sales price computed in part a? Using the margin of safety, compute operating income at 100,000 units. d. Assume that the marketing manager thinks that the price of this product must be no higher than $130 to ensure market penetration. Will the setting the sales price at $130 enable Thermal Tent to break even, given the plans to manufacture and sell 150,000 units? Explain your