A firm incurs labor costs of $3.25 per unit and materials costs of $2.50 per unit. Fixed costs are estimated to be $1,125,000. The forecast for demand is 750,000 units. What is the break-even price?

a.

$8.05

b.

$5.75

c.

$4.25

d.

$4.75

e.

$7.25