After reviewing its cost structure (variable costs of 7.50 per unit and monthly fixed costs of 60,000) and its potential market, the Forecast Company established what it considered to be a reasonable selling price. The company expected to sell 50,000 units per month, and planned its monthly results as follows:

Sales 500,000

Variable costs 375,000

Contribution margin 125,000

Fixed costs 60,000

Profit before tax 65,000

Income tax (at 40%) 26,000

Net profit 39,000

a. The price it must charge if the company wants an after tax profit of 45,000 on its expected sales volume of 50,000 units

b. The price it must charge if the company wants a before tax return on sales of 16% on its expected sales volume of 50,000 units

c. The new margin of safety ratio and the amount of profit assuming that the cost structure will remain unchanged but the volume of sales is expected to increase to 60,000 units.

d. The percentage of change in profit and the new expected profit if the company can sell 55,000 units assuming the cost structure and the selling price will remain constant.

e. The new selling price that will give the same contribution margin ratio if the operations manager believes variable cost will increase 8.25 per unit while the sales manager believe the selling price can be increased.