The Solvents Division of the SomersetCorporation is one of many producers of a popular industrialsolvent. During this past year they priced this product at$8/bottle. They arrived at this price by applying the directivefrom the corporate office that the Solvents Division should earn anet profit of at least $80,000 to their projection that 100,000units would be sold during this past year. Their thinking can besummarized as follows:

                       Projected unit sales=            100,000

                       Revenue                             $800,000           (=$8/unit x 100,000 units)

                       Variablecosts                     -300,000           (=$3/unit x 100,000 units)

                       Fixedcosts                          -420,000

                       Net profit                             -20,000

     The presidentof the Solvents Division is now making the pricing decision for theupcoming year. His current thinking can be summarized by thefollowing quote: “This past year’s problem was that we didn’t do agood job of predicting sales. Now that we know that sales will be80,000 units, we can price this product so we can make that $80,000of net profit that the corporate office wants.”

1. Compute the price per unit that is specified by the president’scurrent thinking (you can assume that the past year’s fixed costsand variable costs/unit are the same as those for the upcomingyear).