Reference no: EM132960143

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 P3 per unit. Enough capacity exists in the Company's plant to produce 16,000
units of the toy each month. Variable costs to manufacture and sell one unit would be P1.25, and fixed costs associated with the toy would total  P35,000 per month.

The Company's Marketing Department predicts that the demand for the new toy will exceed 16,000 units that the company is able to produce.
Additional manufacturing space can be rented from another company at a fixed cost of P1,000 per month. Variable costs in the rented facility would total P1.40 per unit, due to somewhat less efficient operations than in the main plant.

Required:

Problem a) Compute the monthly breakeven point for the new toy in units and in total sales in pesos. Show computations in good form.

Problem b) How many units must be sold each month to make a monthly profit of P12,000?

Problem c) If the sales manager receives a bonus of 10 cents for each unit sold more than the breakeven point, how many units must be sold each month to earn a return of 25% on the monthly investment in fixed costs?