ABC, Inc., produces a variety of products that carry the logos of teams in Liga ng mga Laro (LNL). The company recently paid the league $85,000 for the rights to market a popular player jersey and immediately began production. The following information is available:

Number of jerseys manufactured: 25,000

Cost of jerseys manufactured: $625,000

Amount of manufacturing costs paid to-date: $410,000

Number of jerseys sold to-date: 0

Estimated future marketing costs: $330,000

Anticipated selling price per jersey: $42

The LNL is about to file a lawsuit to stop jersey sales and is demanding another $50,000 from ABC for the manufacturing rights. Conversations with ABC's attorneys indicate that the league has a strong case and is likely to win the suit. If this situation arises, ABC will be unable to recover any amounts paid to the LNL.

Required:

ABC's sales department anticipates very strong demand and a sellout of all jerseys manufactured.

a. Determine the effect on profit of the company if ABC settles the disagreement with the LNL and the anticipated sellout occurs.

b. Considering the above, what is the minimum number of jerseys sold wherein the company will decide just to drop it.