Akola company has developed a new project that will be marketed for the first time during the next fiscal year. Although the Marketing Department estimates that 35,000 units could be sold at $35 per unit, management has enough capacity to produce a maximum of 25,000 units of the new product annually. The fixed costs associated with the new product are budgeted at $450,000 for the year, which includes $60,000 for depreciation on the new equipment. Data associated with each unit of product are presented as follows. Akola is subject to a 40% income tax rate.

Cost Unit Price

Direct material $7.00

Direct Labor $ 3.50

Manufacturing Overhead 4.00

Total Variable Manufacturing cost per unit $14.50

Selling expenses 1.50

Total Variable Cost per unit $16.00

1. The maximum after-tax income that can be earned by Akola Company can earn from sales of the new product during the next fiscal year is how much?
2. Akola company has stipulated that it will not approve the continued manufacture of the new product after the next fiscal year unless it can earn an after-tax profit is $75,000 in the first year. What is the minimum unit selling price that must be set to achieve this target income?