. Justin Manufacturing Inc. has begun production on a new product. The primary cost of the product is direct materials with a cost of $80. Direct labor is estimated to be $25 per unit, overhead is estimated to be $8 per unit, and selling and administrative expenses are estimated to be $5 per unit.

Justin desires a profit of $40 per unit.

Required:

A.

What is the required markup percentage on direct materials in order to achieve the desired profit? Round the percentage to two decimal places.

B.

What will be the sales price of the new product?

2. When increases or decreases in price affect the demand for a product, the product is described as being:

a.	competitive.
b.	elastic.
c.	inelastic.
d.	predatory.