Play Company makes plastic rattle for toddlers. The rattle is generally marketed through exclusive retailers located in upscale shopping malls. In late 2023 the president of the company, was considering an alternative marketing plan for 2024 that was presented to her by the marketing manager. Based on sales from January through October 2023, President expected that 2024 sales would amount to 100,000 units. Manager's alternative marketing plan is presented below:

2024 Marketing Plan: At the present time, we sell the product to retailers for $15.00 per rattle. Retailers generally charge the consumers between $16 and $16.50. If we cut our selling price to retailers to $14.00, I expect that the product will do much better. The retailers' increased markup will give them the incentive to display our product more prominently and to promote it more vigorously to customers. We should support this strategy by supplying more promotional materials to retailers, which I expect would be an increase of $2,000 in Advertising and Promotion costs. Based on the price cut and the increase in advertising and promotion, I expect that we will be able to boost our sales volume by 20 percent to 120,000 units in 2024.

Diana received cost data from the companys CFO. CFO expects that the cost data below are also reliable estimates for 2024 for a production volume up to 150,000 units. Beyond 150,000 units, the company would have to rent additional machines (with a capacity of 50,000 units each), which would increase fixed manufacturing overhead costs by $20,000 per machine.

Sales Price (Current) = $15 per rattle

Sales Price (Proposed) = $14 per rattle

Units Sold (Current) = 100000

Units Sold (Proposed) = 120000

2023 Cost Data and Estimated 2024 Cost Data

Manufacturing Costs for rattles (based on production volume of 100,000 units):

Direct Material = $1.60 per unit

Direct Labor = $0.80 per unit

Packaging = $0.25 per unit

Variable Manufacturing Overhead = $1.20 per unit

Fixed Manufacturing Overhead = $360,000 with expected increase of $20,000 per machine after relevant range

Selling and Administrative Costs for rattles (based on sales volume of 100,000 units):

Sales Commissions = $1.50 per unit

Shipping Costs = $0.75 per unit

Advertising and Promotion (fixed) = $90,000 with expected increase of $2,000

Fixed Selling and Admin Expenses = $150,000

a) What is the operating income and Break even point in units assuming no change in selling prices or costs?

b) What is the operating income and Break even point in units assuming sales and production increase by 20% as outlined in the Marketing Plan?

c) What is the Break even point in units assuming the selling price and cost changes in the Marketing Plan are adopted and the company wants ot earn $300,000 in profit?