1. The owners have set a target profit of $25,000 per month ($300,000 per year) in order for them to decide to devote themselves full time to JW Sports Supplies. Realizing from their projected income statements that their current predictions fall short of the $25,000, they want to evaluate the impact of alternative actions. Specifically, they want to evaluate each of the following factors separately (in doing so, assume all other factors stay the same as projected in the income statement): a. What price must the company set to achieve a profit of $25,000? A) What must the Variable cost per unit be to achieve a profit of $25,000? B) How many units must it sell to achieve a profit of $25,000? C) What must total monthly fixed costs be to achieve a profit of $25,000?

Cost Category Fixed Cost Variable Cost per unit 30 Direct Material Direct Labor Rent Depreciation Electricity Other Manufacturing Selling Sales Commission Administrative 1200 Units produced and sold 36,000 18,000 5,000 4,000 4,400 19,600 8,000 12,000 5,000 1900 Units produced and sold 57,000 28,500 5,000 4,000 5,800 21,700 8,000 19,000 5,000 5,000 4,000 2,000 16,000 8,000 5,000 Cost Category Fixed Cost Variable Cost per unit 30 Direct Material Direct Labor Rent Depreciation Electricity Other Manufacturing Selling Sales Commission Administrative 1200 Units produced and sold 36,000 18,000 5,000 4,000 4,400 19,600 8,000 12,000 5,000 1900 Units produced and sold 57,000 28,500 5,000 4,000 5,800 21,700 8,000 19,000 5,000 5,000 4,000 2,000 16,000 8,000 5,000