Sonic Charge, is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the companys costs and expenses (other than income taxes).

	Fixed				Variable per Unit
Manufacturing costs:
Direct materials					$	25
Direct labor						15
Manufacturing overhead	$	500,000				8
Period costs:
Selling expenses						2
Administrative expenses		300,000
Totals	$	800,000			$	50

Required:

a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.)

b. At the unit sales price computed in part a, how many units must the company produce and sell to break even? (Assume all units produced are sold.)