Homework Help is Here – Start Your Trial Now!
Business
Accounting
Problem 5-25 Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] 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 $3.20 per unit. Enough capacity exists in the company's plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.02, and fixed expenses associated with the toy would total $52,954 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,648 per month. Variable expenses in the rented facility would total $2.24 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. Compute the monthly break-even point for the new toy in unit sales and in dollar sales. (Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.) Break-even point in unit sales Break-even point in dollar sales units 2. How many units must be sold each month to make a monthly profit of $11,808? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units 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 earn a return of 24% on the monthly investment in fixed expenses? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units

Problem 5-25 Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] 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 $3.20 per unit. Enough capacity exists in the company's plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.02, and fixed expenses associated with the toy would total $52,954 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,648 per month. Variable expenses in the rented facility would total $2.24 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. Compute the monthly break-even point for the new toy in unit sales and in dollar sales. (Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.) Break-even point in unit sales Break-even point in dollar sales units 2. How many units must be sold each month to make a monthly profit of $11,808? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units 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 earn a return of 24% on the monthly investment in fixed expenses? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units

Accounting
Accounting
27th Edition
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Chapter21: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 21.4CP: Break-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is...
See similar textbooks
icon
Related questions
Question
Problem 5-25 Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] 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 $3.20 per unit. Enough capacity exists in the company's plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.02, and fixed expenses associated with the toy would total $52,954 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,648 per month. Variable expenses in the rented facility would total $2.24 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. Compute the monthly break-even point for the new toy in unit sales and in dollar sales. (Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.) Break-even point in unit sales Break-even point in dollar sales units 2. How many units must be sold each month to make a monthly profit of $11,808? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units 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 earn a return of 24% on the monthly investment in fixed expenses? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units
Transcribed Image Text:Problem 5-25 Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] 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 $3.20 per unit. Enough capacity exists in the company's plant to produce 30,200 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.02, and fixed expenses associated with the toy would total $52,954 per month. The company's Marketing Department predicts that demand for the new toy will exceed the 30,200 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $2,648 per month. Variable expenses in the rented facility would total $2.24 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. Compute the monthly break-even point for the new toy in unit sales and in dollar sales. (Round "per unit" to 2 decimal places, intermediate and final answers to the nearest whole number.) Break-even point in unit sales Break-even point in dollar sales units 2. How many units must be sold each month to make a monthly profit of $11,808? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units 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 earn a return of 24% on the monthly investment in fixed expenses? (Round "per unit" to 2 decimal places, intermediate and final answer to the nearest whole number.) Total units to be sold units
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Financial & Managerial Accounting
Financial & Managerial Accounting
Accounting
ISBN:
9781337119207
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS