Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer using the information provided in the images Neptune Company has developed a small inflatable toy that it is anxious to introduce to its

image text in transcribed
Please answer using the information provided in the images
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 wilt renge between 18,000 units and 38,000 units per month. The new toy will sell for S4.OO per unit. Enough capacity exists in the company's plant to produce 21,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.00 , and incremental fixed expenses associated with the toy would total $25,000 per month. Neptune has also identified an outside supplier who could produce the toy for a price of $275 per unit plus a fixed fee of $18,000 per month for any production volume up to 23,000 units. For a production volume between 23,001 and 43,000 units the fixed fee would increase to a total 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 intermediate calculations.) How much profit will Neptune earn assuming: a. It produces and sells 21,000 units. b. It does not produce any units and instead outsources the production of 21,000 units to the outside supplier and then sells those units to its customers. 3. Calculate the break-even point in unit sales assuming that Neptune plans to use ell Of its production capacity to produce the first 21000 units that it sells and that it also 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 capacity to produce the first 21,000 units that it sells and that it also commits tn 17 nnn 4_ Assume that Neptune plans to use all of its production capacity to produce the first 21,000 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 $19,500 per month? c- How much profit will Neptune earn if it sells 38,000 units per month? d_ How much profit will Neptune earn if it sells 38,000 units per month and agrees to pay its marketing manager a bonus of 30 cen for each unit sold above the break-even point from requirement 3? S. If Neptune outsources all production to the outside supplier, how much profit will the company earn if it sells 38,000 units? 1. Break-even gnint in unit sales - without hiring 2a. Profit if produces and sells 2b_ profit if outsources production and sells 3. Break-even point in unit sales - hiring aa_ Total unit sales 4b Total unit sales to achieve a target Profit of slg,soo 4c. Net operating income 4d. Net overating income - bonus to marketing manager 5. Net operating inmrne - tully outsourced s 12,500 17,000 8,250 37,000 units units units units

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

Step: 3

blur-text-image

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

Accounting Principles Part 2

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

6th Canadian edition Volume 1

1118306791, 978-1118306796

More Books

Students also viewed these Accounting questions