1. Color Changing Coffee Mugs offers a wide variety of novelty themed coffee mugs to distributors and retailers and recently added a new faster heat changing color mug to its line. The following cost information pertains to the cost of the new heat sensitive mug:

Materials and labor: $1.25/mug

Artist royalties for mug art design $1.35/mug

Advertising and promotion $100,000

Factory overhead $250,000

Price to distributor $9.00

Calculate the following:

a. Contribution per mug

b. Break even volume in units and dollars

c. Necessary unit volume to achieve $200,000 profit