|Question||(a) The Gap is planning a new line of leather jean jackets for $100. It is having the jackets produced in the Dominican Republic. Although The Gap does not own the factory, its product development and design costs are $400,000. The total cost of the jacket, including transportation to the stores, is $45. For this line to be successful, The Gap needs to make $900,000 profit. What is its break-even point in units and dollars?
(b) The buyer has just found out that Club Monaco, one of The Gap’s major competitors, is bringing out a similar jacket that will retail for $90. If The Gap wishes to match Club Monaco’s price, how many units will it have to sell?