Specialty Steel, Inc. will manufacture and sell 200,000 units next year. Fixed costs will total $280,000, and variable costs will be 55 percent of sales.

a. The firm wants to achieve a level of earnings before interest and taxes of $300,000. What selling price per unit is necessary to achieve this result?

b. Set up a pro forma income statement to verify your solution to part a.

1 a. What selling price per unit is necessary to achieve a level of earnings before interest and taxes of $300,000? $________ enter your response here

2 b. Set up a pro forma income statement to verify your solution to part a. (Round up all items to the nearest dollar.)

Sales ___________

Less: Variable costs (55% of sales) __________

Revenues before fixed costs ___________

Less: Fixed costs _________

EBIT $300,000