Blue Mouse Manufacturers is considering a project that will have fixed costs of $$12,000,000.$ The product will be sold for $$32\mathrm{.}50$ per unit, and will incur a variable cost of $$12\mathrm{.}80$ per unit.

Given the cost structure of Blue Mouse, it will have to sell $-$ units to break even on this project $(Q_{BE}).$

Marketing sales director of Blue Mouse Manufacturers 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 $$20,000,000.$ In fact, she believes that the firm will be able to sell only about $150,000$ units. However, she also thinks the demand for Blue Mouse's product is relatively inelastic, so the firm can increase the sale price.

Assuming that Blue Mouse can sell $150,000$ units, what price must it set to meet the CFO's EBIT goal of $$20,000,000?$

$$237\mathrm{.}44$ per unit

$$282\mathrm{.}66$ per unit

$$260\mathrm{.}05$ per unit

$$226\mathrm{.}13$ 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 fac remain constant.

$\backslash$table$[[$The firm depreciates its fixed assets more quickly over a shorter life.,Increase Decrease No Change$],[$The variable cost per unit decreases.,$],[$The amount of debt increases, causing the firm's total interest expense to increase.,$]]$

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