Extensions of the Basic Model—Taxes: Mary J. Sales Corporation is contemplating introducing a new line of cosmetic kits for skin care. The kits would sell for $12 each. The variable costs associated with each kit amount to $3. If the kits are to be introduced nationwide, the company will have to obtain acceptable profits on a test market basis. The fixed costs associated with test marketing amount to $260,000 per year.

Required:

a. Compute the break-even point in units for test market sales.

b. If the desired profit level is $80,000 before tax, compute the sales level in units required to attain that profit level.

c. Assuming the tax rate is 45 percent and the desired profit level is $80,000 after tax, compute the required unit sales level.