Parker Pharmaceuticals, Inc., plans to sell 500,000 units of anti-venom at an average price of $6 each in the coming year. Total variable costs equal $600,000. Total fixed costs equal $8,000,000.

Required:

1. What is the contribution margin per unit? What is the contribution margin ratio?

2. Calculate the sales revenue needed to break even.

3. Calculate the sales revenue needed to achieve a target profit of $650,000.

4. What ifthe average price per unit increased to $7? Recalculate:

a. Contribution margin per unit

b. Contribution margin ratio (rounded to four decimal places)

c. Sales revenue needed to break even

d. Sales revenue needed to achieve a target profit of $650,000 LO1