Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
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
Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The companys Marketing Department estimates that demand for the new toy will range between units and units per month. The new toy will sell for $ per unit. Enough capacity exists in the companys plant to produce units of the toy each month. Variable expenses to manufacture and sell one unit would be $ and incremental fixed expenses associated with the toy would total $ per month. Neptune has also identified an outside supplier who could produce the toy for a price of $ per unit plus a fixed fee of $ per month for any production volume up to units. For a production volume between and units the fixed fee would increase to a total of $ per month. Required: Calculate the breakeven point in unit sales assuming that Neptune does not hire the outside supplier. Do not round your intermediate calculations. How much profit will Neptune earn assuming: a It produces and sells units. b It does not produce any units and instead outsources the production of units to the outside supplier and then sells those units to its customers. Calculate the breakeven point in unit sales assuming that Neptune plans to use all of its production capacity to produce the first units that it sells and that it also commits to hiring the outside supplier to produce up to additional units. Assume that Neptune plans to use all of its production capacity to produce the first units that it sells and that it also commits to hiring the outside supplier to produce up to additional units. a What total unit sales would Neptune need to achieve in order to equal the profit earned in requirement a b What total unit sales would Neptune need to achieve in order to attain a target profit of $ per month? c How much profit will Neptune earn if it sells units per month? d How much profit will Neptune earn if it sells units per month and agrees to pay its marketing manager a bonus of cents for each unit sold above the breakeven point from requirement If Neptune outsources all production to the outside supplier, how much profit will the company earn if it sells units?
Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The companys Marketing Department estimates that demand for the new toy will range between units and units per month. The new toy will sell for $ per unit. Enough capacity exists in the companys plant to produce units of the toy each month. Variable expenses to manufacture and sell one unit would be $ and incremental fixed expenses associated with the toy would total $ per month.
Neptune has also identified an outside supplier who could produce the toy for a price of $ per unit plus a fixed fee of $ per month for any production volume up to units. For a production volume between and units the fixed fee would increase to a total of $ per month.
Required:
Calculate the breakeven point in unit sales assuming that Neptune does not hire the outside supplier. Do not round your intermediate calculations.
How much profit will Neptune earn assuming:
a It produces and sells units.
b It does not produce any units and instead outsources the production of units to the outside supplier and then sells those units to its customers.
Calculate the breakeven point in unit sales assuming that Neptune plans to use all of its production capacity to produce the first units that it sells and that it also commits to hiring the outside supplier to produce up to additional units.
Assume that Neptune plans to use all of its production capacity to produce the first units that it sells and that it also commits to hiring the outside supplier to produce up to additional units.
a What total unit sales would Neptune need to achieve in order to equal the profit earned in requirement a
b What total unit sales would Neptune need to achieve in order to attain a target profit of $ per month?
c How much profit will Neptune earn if it sells units per month?
d How much profit will Neptune earn if it sells units per month and agrees to pay its marketing manager a bonus of cents for each unit sold above the breakeven point from requirement
If Neptune outsources all production to the outside supplier, how much profit will the company earn if it sells units?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started