QUESTION 7

1. Liliac Company sells a single product. The following information is given for current sales (2,000 units):

   Sales: $50,000 ($25 per unit)

   Variable expenses $34,000 ($17 per unit)

   Contribution margin $16,000

   Fixed expenses $12,000

   Profit $4,000

   For the upcoming period, the company has a plan to sell 2,500 units and generate a $5,500 profit. For this plan, the company is changing the per-unit selling price of the product. Per-unit Variable expense and total fixed expense will stay the same. The new selling price should be:

   		$24
   		$25
   		$30
   		$27
   		$21