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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F498466f1-9ed0-4bc2-9a3e-f4e96b467ae3%2F69629f44-0016-4ba7-a0cc-2355a91711c9%2Fspxnjf_processed.jpeg&w=3840&q=75)
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
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 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