Fact Pattern:

Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the variable cost to manufacture them was $2.25 per unit. The company needed to sell 20,000 shirts to break even. The net income last year was $5,040. Donnelly's expectations for the coming year include the following:

1. The sales price of the T-shirts will be $9.
2. Variable cost to manufacture will increase by one-third.
3. Fixed costs will increase by 10%.
4. The income tax rate of 40% will be unchanged.

The selling price that would maintain the same contribution margin rate as last year is

• A.
• $10.00
• B.
• $9.00
• C.
• $8.25
• D.
• $9.75