Husk Inc. is Iowa's leading manufacturer of corn-related novelties. They plan on introducing Colonel Kernel, the talking corn-on-the-cob action doll, to the Nebraskan market. When negotiating with Nebraskan retailers, Husk suggested a retail price of $8 and offered a 25% trade discount (=retailers margin). The cost of manufacturing per unit is $.90 for the parts, $.50 for assembly, $.75 for finishing, $.35 for shipping. It will also cost $95,000 to start a new plant in Omaha and $500 for a commercial permit from the state (which they have to renew every month). Phil Neely, the brand manager in charge of promoting the product, estimates that Husk will spend $10,000 on life-size Colonel Kernel cut-outs (to be given free to retailers for in-store display), $40,000 on TV commercials to be aired on local stations, $7,000 on digital marketing activities, and $43,000 on a giant "Crown of Corns" festival (featuring Dolly Parton and three time Iowa State Fair winner Herb Longman and his incredible pumpkin pie).

1) How many units of Colonel Kernel products will Husk have to sell in order to break even after one year? (5 points)

2) Given the new product introduction, Husk is worried that the sales of their existing corn-on-the-cob dolls might be affected. The average profit margin for the existing dolls is 4$. If at the end of the year, Husk sells 100,000 units of the Colonel Kernel doll, what would be the acceptable maximum sales volume change of the existing dolls for the new product introduction to be considered successful (i.e. profitable). (5 points)