Florist Group Manufactures and sells stellar flowers to those who want to find love. For its 2022 business plan florist group estimated the following

Selling price: $750

Variable cost per flower: $450

Annual fixed cost: $180,000

Net income: $360,000

Tax rate: 25%

The April financial statements reported that sales were not meeting expectations. for the first three months of the year, only 400 units had been sold at the established price. With variable costs staying as planned, it was clear that the 2022 after-tax profit projection would not be reached unless same action was taken. The management committee presented the following mutually exclusive alternatives to the president

1. Reduce the selling price by $60. The sales team forecasts that with the significantly reduced selling price, 3000 units can be sold during the remainder of the year. Total fixed and variable unit costs will stay as budgeted.

2. Lower variables cost per unit by $20 through the use of less expensive direct materials and slightly modified manufacturing techniques. The selling price will also be reduced by $40 and sales of 2,800 units for the remainder of the year forecasted

3. Cut fixed costs by $20,000 and lower the selling price by 5%. Variable costs per unit will be unchanged. Sales of 2,500 units are expected for the remainder of the year.

Required

a) Under the current production policy, determine the number of units that the company must sell to break even and achieve its desired operating income.

b) Determine which alternative the company should select to achieve its desired operating income.