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Neptune Company produces toys and other items for use in beach and resort areas. A...

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Accounting

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 $3.40 per unit. Enough capacity exists in the companys plant to produce 30,100 units of the toy each month. Variable expenses to manufacture and sell one unit would be $2.14, and fixed expenses associated with the toy would total $56,389 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 at a fixed expense of $2,819 per month. Variable expenses in the rented facility would total $2.38 per unit, due to somewhat less efficient operations than in the main plant.

1. How many units must be sold each month to make a monthly profit of $13,158?

2.If the sales manager receives a bonus of 15 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?

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