Answered step by step
Verified Expert Solution
Link Copied!

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 for

image text in transcribed
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 10,000 units and 35,000 units per month. The new toy will sell for $900 per unit Enough capacity exists in the company's plant to produce 15,000 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 $30,000 per month Neptune has also identified an outside supplier who could produce the toy for a price of $400 per unit plus a foxed fee of $31.000 per month for any production volume up to 15,000 units. For a production volume between 15,001 and 35,000 units the fixed fee would Increase to a total of $62,000 per month Required: 1. Calculate the break even point in una sales assuming that Neptune does not hire the outside supplier 2. How much profit wil Neptune eam suming alt produces and sells 15.000 units but does not produce any units and instead outsources the production of 15,000 units to the outside supplier and then tells thote units to its customers 3. Calculate the break-even point in uit sales suming that Neptune plans to use all of its production capacity to produce the first 15,000 units that and that the commits to bring the outside supplier to produce up to 20.000 additional units 4 Assume the Neptune plans to use all of its production capacity to produce the first 15.000 units that it sells and that it also commits to hiring the butside supplier to produce up to 20.000 additional units What total unites would Neptune need to achieve in order to equal the profiteamed in requirement 2a? b. What total unites would Neptune need to achieve in order to oftain a target profit of $32.500 per month How much profit Neptune carte 35,000 units per month? d. How much profit will Neptune can if it wells 35.000 units per month and agrees to pay its marketing manager a bonus of 10 cents for each unit sold above the be point from requirement 3 5. Neptune outsources all production to the outside supplier how much profit will the company or if it als 35.000 units? 2 Pro Profour venport 7.500 5 30.000 5 000 15.200 21200 Tanto 53.500 ad og 5. Nang comed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cornerstones Of Financial Accounting

Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone

3rd Canadian Edition

017689859X, 9780176898595

More Books

Students also viewed these Accounting questions