Delphi Company has developed a new product that will be marketed for the first time during the next fiscal year. Delphi can produce 26,000 units of the new product annually, and they believe that they can sell the product for $30 per unit. The fixed expenses associated with the new product are budgeted at $350,000 for the year. The variable expenses of the new product are $10 per unit.

Required:

(a.) How many units of the new product must Delphi sell each year in order to break even on the product?

(b.) What is the profit Delphi would earn on the new product if they produce 26,000 units and sell them for $30 per unit?

(c.) How many dollars worth of this product must Delphi sell to earn a profit of $60,000?

(d.) One of the guys in the Marketing Department believes that, if Delphi spends an additional $300,000 to double their capacity, spends $120,000 to advertise this product, and lowers the selling price to $27, they can sell 50,000 of them. Which would be more profitable, to sell 26,000 at $30 without spending the extra money, or to spend the extra money and sell 50,000 at $27 each? (Please show numbers that support your answer youll receive no credit for guessing.)