CVP relation and profit planning, unit contribution margin approach (LO1, LO2). Ajay Singh’s gift-wrapping service charges $3 for each package wrapped. Ajay estimates that his variable costs will...

CVP relation and profit planning, unit contribution margin approach (LO1, LO2). Ajay Singh’s gift-wrapping service charges $3 for each package wrapped. 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. Suppose Ajay’s variable costs were to increase by 50% per package. By how much does Ajay’s breakeven sales volume increase?

b. Suppose Ajay estimates that he will be able to wrap 3,000 packages in a month. Assume also that he wishes to earn $2,400 in profit for the month. What is the minimum price that Ajay must charge to reach his profit goal (for this part, assume that Ajay has yet to decide on the price per package wrapped)?