* ALL PART OF ONE QUESTION*

Exercise 1:

Moran Company had $150,000 of net income in Year #1 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in Year #2. The president of Moran Company is under pressure from stockholders to increase net income by $60,000 in Year #2.

Instructions

(a) Compute contribution margin per unit, and the number of units sold in Year #1.

(b) Compute the number of units that would have to be sold in Year #2 to reach the stockholders' desired profit level.

(c) Assume that Moran Company sells the same number of units in Year #2 as it did in Year #1. What would the selling price have to be in order to reach the stockholders' desired profit level?