A manufacturer sells a new product for $280 each. Fixed manufacturing costs are $22,500 per month and the administrative costs are $12,500 per month. Variable costs are $126 per unit plus a royalty of 5% on the selling price.

a. If the manufacturer wants a profit of $21,000 per month, how many units must be sold?

b. If the selling price is reduced by 15%, how many more units must be sold to earn the same profit as before?

AppendixLO1