Blue Mouse Manufacturers is considering a project that will have fixed costs of $\backslash (\backslash$$ $12,000,000\backslash ).$ The product will be sold for $\backslash (\backslash$$ $41\mathrm{.}50\backslash )$ per unit, and will incur a variable cost of $\backslash (\backslash$$ $10\mathrm{.}75\backslash )$ per unit.

Given Blue Mouse's cost structure, it will have to sell

units to break even on this project $(\backslash (\backslash$mathbf$\{$Q$\}\_\{\backslash$mathrm$\{$BE$\}\}\backslash )).$

Blue Mouse Manufacturers's marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $\backslash (\backslash$$ $20,000,000\backslash ).$ In fact, she believes that the firm will be able to sell only about $200,000$ units. However, she also thinks the demand for Blue Mouse Manufacturers's product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell $200,000$ units, what price must it set to meet the CFO's EBIT goal of $\backslash (\backslash$$ $20,000,000\backslash )?$

$\backslash (\backslash$$ $196\mathrm{.}36\backslash )$ per unit

$\backslash (\backslash$$ $179\mathrm{.}29\backslash )$ per unit

$\backslash (\backslash$$ $170\mathrm{.}75\backslash )$ per unit

$\backslash (\backslash$$ $213\mathrm{.}44\backslash )$ per unit

What affects the firm's operating break$-$even point?

Several factors affect a firm's operating break$-$even point. Based on the scenarios described in the following table, indicate whether these factors would increase, decrease, or leave unchanged a firm's break$-$even quantity$-$assuming that only the listed factor changes and all other relevant factors remain constant.

When a large percentage of a firm's costs are fixed, the firm is said to have a degree of operating leverage.