[The following information applies to the questions displayed below.] Serendipity Sound, Inc., manufactures and sells compact discs. Price and cost data are as follows: Selling price per unit (package of two CDs) $ 25.00 Variable costs per unit: Direct material $ 10.50 Direct labor 5.00 Manufacturing overhead 3.00 Selling expenses 1.30 Total variable costs per unit $ 19.80 Annual fixed costs: Manufacturing overhead $ 192,000 Selling and administrative 276,000 Total fixed costs $ 468,000 Forecasted annual sales volume (120,000 units) $ 3,000,000 In the following requirements, ignore income taxes.

1. How many units would Serendipity Sound have to sell in order to earn $260,000? (Do not round intermediate calculations.)

2. What is the firms margin of safety?

3.Management estimates that direct-labor costs will increase by 8 percent next year. How many units will the company have to sell next year to reach its break-even point?

4. If the companys direct-labor costs do increase by 8 percent, what selling price per unit of product must it charge to maintain the same contribution-margin ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)