Disk City, Inc. is a retailer for digital video disks. The projected net income for...
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Disk City, Inc. is a retailer for digital video disks. The projected net income for the current year is $1,600,000 based on a sales volume of 220,000 video disks. Disk City has been selling the disks for $21 each. The variable costs consist of the $9 unit purchase price of the disks and a handling cost of $2 per disk. Disk Citys annual fixed costs are $600,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.)
1. In order to cover a 30 percent increase in the disks purchase price for the coming year and still maintain the current contribution-margin ratio, what selling price per disk must Disk City establish for the coming year? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
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