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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

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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 17,000 units and 37,000 units per month. The new toy will sell for $3.00 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 $1,00. and incremental fixed expenses associated with the toy would total $25,000 per month. Neptune has aiso identified an outside supplier who could produce the toy for a price of $1.75 per unit plus a fixed fee of $18.000 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 totai of $36,000 per month. Required: 1. Calculate the break-even point in unit sales assuming that Neptune does not hire the outside supplier. (Do not round your intermedlate calculations.) 2 How much proft 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. 3. Calculate the breakeven point in unit sales assuming that Neptune plans to use all of its production capacity to produce the first 20,000 unts that 1s sells and that 1t aiso commits to hiring the outside supplier to produce up to 17,000 additional units. 4. Assume that Neptune plans to use all of its production capacty to produce the first 20,000 unirs that it sells and that it also commits to hing the outside supplier to produce up to 17,000 additional units: a. What total unit cales would Neptune need to achleve in order to equal the profit eamed in requitrement 2a ? b. What total unit sales would Neptune need to achieve in order to atrain a target profit of $17,500 per month? c. How much profit will Neptune earn if it sells 37,000 units per month? d. How much profic wit Neptune earn it 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 requitrement 3

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