O’Reilly Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 25%. Management is considering adding a new product that will require an additional $18,000 per month of fixed expenses and will have variable expenses of $9.00 per unit.

Required:

a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%.
b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm’s monthly operating income by $12,000.