David Happy has developed a new product that he is considering the production and selling of it. To proceed with this project, David will be renting a small building to rent for $1,250 a month that will house production facilities. Utility cost of building is expected to be $400 per month. One major piece of equipment that will be used to manufacture the product will be rented for $600 a month. Material costs to make the product are estimated at $8 per unit. Monthly advertising costs for the product are estimated at $1,000. David will be using salespeople for selling the product. Sales commission is $4.00 per unit. David has rented a truck for delivery of the products to customer at $350 per month. David will be paying himself $5,000 per month as salary. David will be spending about 75% of his time for manufacturing the product and 25% for promotion and delivery of the product. Answer the following independent questions.

1. How much is Davids period costs per month?

2. What should be Davids minimum selling price per unit for it product? Hint: to breakeven

3. Assume David has set a selling price per unit of $20 for his new product. How many units must be produced and sold each month in order to make $8,000 profit per month?

4. Assume David has set a selling price per unit of $20 for his new product. David believes hiring a salesperson on salary basis of $5,000 per month could increase the monthly sales considerably. Sales volume must increase by minimum of how many units in order to justify hiring of the additional salesperson?