Answer: $40
Explanation:
Selling price can be calculated through the contribution margin equation;
Contribution margin = (Selling Price - Variable cost) / Selling Price
Contribution margin = Fixed costs/break-even point
= 660,000/1,100,000
= 60%
60% = (Selling Price - 16) / Selling Price
Selling price * 60% = Selling price - 16
16 = Selling price - (0.6 * selling price)
16 = Selling price * 40%
16/40% = Selling price
Selling price = $40
