CVP relation and profit planning, unit contribution margin approach (LO1, LO2). Ajay Singh plans to offer gift-wrapping services at the local mall during the month of December. Ajay will wrap each...

Ajay Singh plans to offer gift-wrapping services at the local mall during the month of December. Ajay will wrap each package, regardless of size, in the customer’s choice of wrapping paper and bow for a price of $3. Ajay estimates that his variable costs will total $1 per package wrapped and that his fixed costs will total $600 for the month.

Required:

a. How many packages does Ajay need to wrap to break even?

b. How many packages must Ajay wrap to earn a profit of $1,400?