Adidas is in the process of completing labor negotiations for the coming year. Part of these negotiations calls for an increase in the base wage rate for direct labor from $15 to $18 per hour, corresponding to fringe benefits. At present, fringe benefits amount to 25% of total wages, and this percentage will remain unchanged with the new contract. The current labor standards call for eight direct labor hours per unit of output. Other conversion costs amount to $50 per unit, of which 80% is for variable costs. Materials costs amount to $8 per unit. Administrative costs are fixed and amount to $10 per unit at the present production level. Products are sold with a gross margin of 30% on sales.

Required:

1. Compute the current selling price of a unit of output!

2. Compute the new selling price to be charged if there is no increase in productivity due to the

   new labor contract!

3. Compute the selling price to be charged if a 20% increase in productivity accompanied the new

   labor contract!