Delphi Company has developed a new product that will be marketed for the first time next year. The product will  have variable costs of $22 per unit. Although the marketing department estimates that 30,000 units could be sold at $38 per unit, Delphi’s management has allocated only enough manufacturing capacity to produce a maximum of 20,000 units a year. The fixed costs associated with the new product are budgeted at  $300,000 for the year. Delphi is subject to a 30% tax rate.

Required

a. How many units of the new product must Delphi sell in the next fiscal year to break even?

b. What is the maximum net income that Delphi can earn from sales of the new product in the next fiscal  year?

c. Delphi’s managers have stipulated that they will not authorize production beyond the next fiscal  year unless the after-tax profit from the new product is at least $85,680. How many units of the new  product must be sold in the next fiscal year to ensure continued production?

d. Regardless of your answer in part (c), assume that more than the allowed production of 20,000 units  will be required to meet the $85,680 net income target. Given the production constraint (maximum of 20,000 units available), what price must be charged to meet the target income and continue production past the next fiscal year?

e. Assume that the marketing manager thinks the price you calculated in part (d) is too high. What  actions could the project manager take to help ensure production of the new product past the current fiscal year?