Question

Help Save & Exit Subm 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 $2.60 per unit. Enough capacity exists in the company's plant to produce 30,100 units of the toy each month. Variable expenses to manufacture and sell one unit would be $1.66, and fixed expenses associated with the toy would total $41,941 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,100 units that the company is able to produce. Additional manufacturing space can be rented from another company ata fixed expense of $2,097 per month. Variable expenses in the rented facility would total $1.82 per unit, due to somewhat less efficient operations than in the main plant kipped 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 $9,750 per month? 3. If the sales manager receives a bonus of 20 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 24 % return on the monthly investment in fixed expenses? (For all requirments, 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 dolar sales 2 units Unit sales needed to attain target profit 3 units Unit sales needed to atain target profit units

Answer 1

Selling price per unit	2.60
Less: Variable costs per unit	1.66
Contribution margin per unit	0.94
Contribution margin ratio (0.94/2.60)	0.36
Fixed expenses	41941
1. Break-even point in unit sales ($41,941/$0.94)	44618
Break-even point in dollar sales ($41,941/0.36)	116503
2. Unit sales needed to attain target profit [($41,941+$9,750)/0.94]	54990
3. Unit sales needed to attain target profit	55953