Problem:
The Kaempfert Corp. sold 1,000,000 units of its unique product last year. The selling price for this product was $5.00 per unit, variable costs were $4.75 per unit and total fixed costs for the year were $600,000. For the upcoming year Kaempfert expects that volume and total fixed costs will not change, and that variable costs will increase due to the introduction of sales commission equal to 10% of the selling price. The tax rate is 40%. What selling price must Kaempfert set for their product if they wish to earn a net income of $30,000?
a. $4.58
b. $5.38
c. $5.40
d. $5.98
e. $6.00