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Neptune Company has developed a small inflatable toy it is anxtous to introduce to its customers. The company's Marketing Department estimates demand for the new

Neptune Company has developed a small inflatable toy it is anxtous to introduce to its customers. The company's Marketing
Department estimates demand for the new toy will range between 15,000 units and 40,000 units per month. The new toy will sell for
$9.00 per unit. Enough capacity exists in the company's plant to produce 20,000 units of the toy each month. Varlable expenses to
manufacture and sell one unit would be $5.00, and incremental fixed expenses assoclated with the toy would total $32,000 per
month.
Neptune has also identified an outside supplier who could produce the toy for a price of $4.00 per unit plus a fixed fee of $49,000 per
month for any production volume up to 20,000 units. For a production volume between 20,001 and 45,000 units, the fixed fee would
increase to a total of $98,000 per month.
Required:
Calculate the break-even point in unit sales assuming Neptune does not hire the outside supplier.
Note: Do not round your intermedlate calculations.
How much profit will Neptune earn assuming:
a. It produces and sells 20,000 units?
b. It does not produce any units and instead outsources the production of 20,000 units to the outside supplier and then sells
those units to its customers?
Calculate the break-even point in unit sales assuming Neptune plans to use all of its production capacity to produce the first 20,000
that it sells and also commits to hiring the outside supplier to produce up to 20,000 additional units.
Assume Neptune plans to use all of its production capacity to produce the first 20,000 units it sells and also commits to hiring the
outside supplier to produce up to 20,000 additional units.
a. What total unit sales would Neptune need to achieve to equal the profit earned in requirement 2 a?
b. What total unit sales would Neptune need to achleve to attain a target profit of $50,500 per month?
c. How much profit will Neptune earn If it sells 40,000 units per month?
d. How much profit will Neptune earn if it sells 40,000 units per month and agrees to pay its marketing manager a bonus of 10
cents for each unit sold above the break-even point from requirement 3?
If Neptune outsources all production to the outside supplier, how much profit will the company earn if it sells 40,000 units?
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