Delphi Company has developed a new product that will be marketed for the first time next year. The product will have variable costs of $18 per unit. Although the marketing department estimates that 52,500 units could be sold at $38 per unit, Delphis management has allocated only enough manufacturing capacity to produce a maximum of 37,500 units a year. The fixed costs associated with the new product are budgeted at $675,000 for the year. Delphi is subject to a 40% tax rate.

Regardless of your answer in part (c), assume that more than the allowed production of 37,500 units will be required to meet the $112,500 net income target. Given the production constraint (maximum of 37,500 units available), what price must be charged to meet the target income and continue production past the next fiscal year?

If it helps, question (c) was Delphis 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 $112,500. How many units of the new product must be sold in the next fiscal year to ensure continued production? The answer is 43,125 units. Didn't have a problem with that part.