Analyzing sales price and fixed cost using the equation method Medlock Company is analyzing whether its new product will be profitable. The following data are provided for analysis.

Expected variable cost of manufacturing $30 per unit Expected fixed manufacturing costs $48,000 per year Expected sales commission $6 per unit Expected fixed administrative costs $12,000 per year The company has decided that any new product must at least break even in the first year.

Required Use the equation method and consider each requirement separately.

a. If the sales price is set at $48, how many units must Medlock sell to break even?

b. Medlock estimates that sales will probably be 6,000 units. What sales price per unit will allow the company to break even?

c. Medlock has decided to advertise the product heavily and has set the sales price at $54. If sales are 9,000 units, how much can the company spend on advertising and still break even?