Neptune Company has developed a small Inflatable toy that It Is anxlouUs to Introduce to Its customers. The company's Marketing Department estimates that demand for the new toy will range between 15,000 units and 35,000 units per month. The new toy will sell for $3 per unit. Enough capacity exists In the companys plant to produce 18,000 units of the toy each month. Varlable expenses to manufacture and sell one unit would be $1.00, and Incremental fixed expenses assoclated with the toy would total $22,000 per month. Neptune has also Identified an outside supplier who could produce the toy for a price of $1.75 per unit plus a fixed fee of $15,000 per month for any production volume up to 20,000 units. For a production volume between 20,001 and 40,000 units the fixed fee would Increase to a total of $30,000 per month. Required: 1 Calculate the break-even polnt In unit sales assuming that Neptune does not hire the outslde suppler 2. How much profit with Neptune earn assuming. a.It.produces and sells 18.000 units. b. It does not produce any units and Instead outsources the production of 18,000 units to the outside suppller and then sells those unIts to Its Customers, 3.Calculate the break-even polnt in unt sales assuming that Neptune plans to use all of Its production capaclty to produce the first 18,000units that It sells and that It also commits to hiring the outside supplier to produce up to 17.000 additlonal units. 4. Assume that Neptune plans to use all of Its production capacity to produce the first 18.000 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 ordento equal the profit earned In requirement 2a? b. What total unit sales wvould Neptune need to achleve In orderto attaln a target profit of S16,500 per month? c. How much profit will Neptune earm f it sells 35,000 units permonth? d. How much profit willl Neptune earn If it sells 35.00o units per month and agrees to pay ts marketing manager a bonus of 10 cents for each unit sold above the break-even point from requirement 33 5. If Neptune outsources all production to the outslde supplier how much profit will the company earn If it sells 35,000 units? U. HUW MUch profit WIll Neptune earn If It sells 35,000 units per month and agrees to pay Its marketing manager a bonus c for each unit sold above the break-even polnt from requlrement 3? 5. If Neptune outsources all production to the outslde supplier, how much profit will the company earn If It sells 35,000 units? 1. Break-even point in unit sales - without hiring units 2a. Profit if produces and sells 2b. Profit if outsources production and sells 3. Break-even point in unit sales hiring units 4a. Total unit sales units 4b. Total unit sales to achieve a target Profit of $16,500 units 40. Net operating income 4d. Net operating income - bonus to marketing manager 5. Net operating income - fully outsourced

Neptune Company has developed a small Inflatable toy that It Is anxlouUs to Introduce to Its customers. The company's Marketing Department estimates that demand for the new toy will range between 15,000 units and 35,000 units per month. The new toy will sell for $3 per unit. Enough capacity exists In the companys plant to produce 18,000 units of the toy each month. Varlable expenses to manufacture and sell one unit would be $1.00, and Incremental fixed expenses assoclated with the toy would total $22,000 per month. Neptune has also Identified an outside supplier who could produce the toy for a price of $1.75 per unit plus a fixed fee of $15,000 per month for any production volume up to 20,000 units. For a production volume between 20,001 and 40,000 units the fixed fee would Increase to a total of $30,000 per month. Required: 1 Calculate the break-even polnt In unit sales assuming that Neptune does not hire the outslde suppler 2. How much profit with Neptune earn assuming. a.It.produces and sells 18.000 units. b. It does not produce any units and Instead outsources the production of 18,000 units to the outside suppller and then sells those unIts to Its Customers, 3.Calculate the break-even polnt in unt sales assuming that Neptune plans to use all of Its production capaclty to produce the first 18,000units that It sells and that It also commits to hiring the outside supplier to produce up to 17.000 additlonal units. 4. Assume that Neptune plans to use all of Its production capacity to produce the first 18.000 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 ordento equal the profit earned In requirement 2a? b. What total unit sales wvould Neptune need to achleve In orderto attaln a target profit of S16,500 per month? c. How much profit will Neptune earm f it sells 35,000 units permonth? d. How much profit willl Neptune earn If it sells 35.00o units per month and agrees to pay ts marketing manager a bonus of 10 cents for each unit sold above the break-even point from requirement 33 5. If Neptune outsources all production to the outslde supplier how much profit will the company earn If it sells 35,000 units? U. HUW MUch profit WIll Neptune earn If It sells 35,000 units per month and agrees to pay Its marketing manager a bonus c for each unit sold above the break-even polnt from requlrement 3? 5. If Neptune outsources all production to the outslde supplier, how much profit will the company earn If It sells 35,000 units? 1. Break-even point in unit sales - without hiring units 2a. Profit if produces and sells 2b. Profit if outsources production and sells 3. Break-even point in unit sales hiring units 4a. Total unit sales units 4b. Total unit sales to achieve a target Profit of $16,500 units 40. Net operating income 4d. Net operating income - bonus to marketing manager 5. Net operating income - fully outsourced

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 13P: The Silver Star Bicycle Company will manufacture both mens and womens models for its Easy-Pedal...

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