1. You are presented with the following information

	Total cost ($)	Per unit cost ($)
Variable manufacturing cost
Direct material cost	7,500,000	30
Direct labour cost	7,500,000	30
Variable manufacturing overhead cost	3,750,000	15
Total variable manufacturing costs	18,750,000	75
Fixed manufacturing cost	5,000,000	20
Total manufacturing costs	23,750,000	95
Selling and administrative expenses
Selling expenses	3,750,000	15
Administration and general expenses	2,500,000	10
Total selling and administration expenses	6,250,000	25
Total cost and expenses	30,000,000	120
Units manufactured	250,000

1. Assuming a desired profit of $3,250,000, calculate the gross margin mark-up percentage.

2. Calculate the gross margin-based price.

3. Assume the same gross margin mark-up percentage calculated in Question 5(a)(i). The entity is considering setting the price at $126 per unit to match the prices set by the entitys competitors. Calculate the amount by which the total per unit manufacturing cost needs to decrease to achieve the same gross mark-up percentage.

4. Assume that the entity decides to set the price at $126. The entity is confident that the cost saving calculated in Question 5(a)(iii) can be achieved. Calculate the decrease in the per unit total selling and administration expenses that the entity needs to achieve to generate the desired profit of $3,250,000.