Lethal Industries has recently patented a new product called MaxiDrive, an automobile oil for maximum engine performance. The following annual information was developed by the company's controller for use in price determination:

Variable production costs	$1,860,000
Fixed overhead	620,000
Selling expenses	420,000
General and administrative expenses	230,000
Desired profit	342,000

Annual demand for the product is expected to be 500,000 quarts. Round answers to nearest two decimal places.

a. Compute the projected unit cost for one quart of MaxiDrive

B. Prepare the formulas for computing the markup percentage and the selling price for one quart using the gross margin pricing method