Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.50 per unit. Enough capacity exists in the company's plant to produce 30,700 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.20, and fixed expenses associated with the toy would total $59,365 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,700 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,968 per month. Variable expenses in the rented facility would total $2.45 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. What is the monthly break-even point for the new toy in unit sales and dollar sales. 2. How many units must be sold each month to attain a target profit of $13,230 per month? 3. If the sales manager receives a bonus of 25 cents for each unit sold in excess of the break-even point, how many units must be sold each month to attain a target profit that equals a 26% return on the monthly investment in fixed expenses? (For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.)
Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.50 per unit. Enough capacity exists in the company's plant to produce 30,700 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.20, and fixed expenses associated with the toy would total $59,365 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,700 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,968 per month. Variable expenses in the rented facility would total $2.45 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. What is the monthly break-even point for the new toy in unit sales and dollar sales. 2. How many units must be sold each month to attain a target profit of $13,230 per month? 3. If the sales manager receives a bonus of 25 cents for each unit sold in excess of the break-even point, how many units must be sold each month to attain a target profit that equals a 26% return on the monthly investment in fixed expenses? (For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:Required:
1. What is the monthly break-even point for the new toy in unit sales and dollar sales.
2. How many units must be sold each month to attain a target profit of $13,230 per month?
3. If the sales manager receives a bonus of 25 cents for each unit sold in excess of the break-even point, how
many units must be sold each month to attain a target profit that equals a 26% return on the monthly investment
in fixed expenses?
(For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest
whole number.)
1. Break-even point in unit sales
Break-even point in dollar sales
2.
Unit sales needed to attain target profit
3. Unit sales needed to attain target profit
units
units
units
Transcribed Image Text:Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has
come onto the market that the company is anxious to produce and sell. The new toy will sell for $3.50 per unit.
Enough capacity exists in the company's plant to produce 30,700 units of the toy each month. Variable expenses
to manufacture and sell one unit would be $2.20, and fixed expenses associated with the toy would total
$59,365 per month.
The company's Marketing Department predicts that demand for the new toy will exceed the 30,700 units that the
company is able to produce. Additional manufacturing space can be rented from another company at a fixed
expense of $2,968 per month. Variable expenses in the rented facility would total $2.45 per unit, due to
somewhat less efficient operations than in the main plant.
Required:
1. What is the monthly break-even point for the new toy in unit sales and dollar sales.
2. How many units must be sold each month to attain a target profit of $13,230 per month?
3. If the sales manager receives a bonus of 25 cents for each unit sold in excess of the break-even point, how
many units must be sold each month to attain a target profit that equals a 26% return on the monthly investment
in fixed expenses?
(For all requirements, Round "per unit" to 2 decimal places, intermediate and final answers to the nearest
whole number.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education