Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The company's Marketing Department estimates that demand for the new toy will range between 20,000 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 25,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $5.00 , and incremental fixed expenses associated with the toy would total $36,000 per month. Neptune has also identied an outside supplier who could produce the toy for a price of $4.00 per unit plus a xed fee of $65,000 per month for any production volume up to 25,000 units. For a production volume between 25,001 and 55,000 units the fixed fee would increase to a total of $130,000 per month. Required: 1. Calculate the break-even point in unit sales assuming that Neptune does not hire the outside supplier. 2. How much prot will Neptune earn assuming: a. It produces and sells 25,000 units. b. It does not produce any units and instead outsources the production of 25,000 units to the outside supplier and then sells those units to its customers. 3. Calculate the break-even point in unit sales assuming that Neptune plans to use all of its production capacity to produce the first 25,000 units that it sells and that it also commits to hiring the outside supplier to produce up to 15,000 additional units. 4. Assume that Neptune plans to use all of its production capacity to produce the rst 25,000 units that it sells and that it also commits to hiring the outside supplier to produce up to 15,000 additional units. a. What total unit sales would Neptune need to achieve in order to equal the profit earned in requirement 2a? b. What total unit sales would Neptune need to achieve in order to attain a target profit of $66,500 per month? c. How much prot 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 of10 cents for each unit sold above the break-even point from requirement 3? 5. If Neptune outsources all production to the outside supplier, how much prot will the company earn if it sells 40,000 units? 5. If Neptune outsources all production to the outside supplier, how much prot will the company earn if it sells 40,000 units? 1' Break-even point in unit sales - without hiring 2a. Prot if produces and sells 2b. Prot if outsources production and sells 3. Break-even point in unit sales - hiring 4a. Total unit sales 4b. Total unit sales to achieve a target Prot of $66,500 4c. Net operating income 4d. Net operating income - bonus to marketing manager 5. Net operating income - fully outsourced