Clarendon Instruments produces a patented testing device, which it sells for $3,000 per unit.

As a financial analyst that reports on the company, you learn that there is a good chance that the variable cost per unit will increase by 20 percent because of shortages in the materials market. The CFO at Clarendon mentions that if the variable cost does increase, the break-even level of sales will increase by 50 percent, but it should not threaten the company's ability to pay dividends or make debt payments. You are interested in checking this.

Required:

Compute the current variable cost per unit and the variable cost per unit should the increase occur.