Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The company's Marketing Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard

paraglider model, but also makes custom$-$designed paragliders. Management has designed an activity$-$based costing system with the

following activity cost pools and activity rates:

Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following

products over the last $12$ months:

The company's direct labor rate is $$22$ per hour.

Required:

Using the company's activity$-$based costing system, compute the customer margin of Big Sky Outfitters. $($Round your intermediate

calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.$)$

Answer is complete but not entirely correct.

Department estimates that demand for the new toy will range between $17,000$ units and $37,000$ units per month. The new toy will sell

for $$5\mathrm{.}00$ per unit. Enough capacity exists in the company's plant to produce $20,000$ units of the toy each month. Variable expenses to

manufacture and sell one unit would be $$3\mathrm{.}00,$ and incremental fixed expenses associated with the toy would total $$27,000$ per

month.

Neptune has also identified an outside supplier who could produce the toy for a price of $$3\mathrm{.}75$ per unit plus a fixed fee of $$20,000$ per

month for any production volume up to $22,000$ units. For a production volume between $22,001$ and $42,000$ units the fixed fee would

increase to a total of $$40,000$ per month.

Required:

Calculate the break$-$even 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 $20,000$ 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 that Neptune plans to use all of its production capacity to produce the first

$20,000$ units that it sells and that it also commits to hiring the outside supplier to produce up to $17,000$ additional units.

Assume that Neptune plans to use all of its production capacity to produce the first $20,000$ units that it sells and that it also commits

to hiring the outside supplier to produce up to $17,000$ 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 $$15,500$ per month?

c$.$ How much profit will Neptune earn if it sells $37,000$ units per month?

d$.$ How much profit will Neptune earn if it sells $37,000$ units per month and agrees to pay its marketing manager a bonus of $20$ 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 $37,000$ units?

Answer is complete but not entirely correct.