Question: Delphi Company has developed a new product that will be marketed for the first time during the next fiscal year. Although the marketing department estimates

Delphi Company has developed a new product that will be marketed for the first time during the next fiscal year. Although the marketing department estimates that $35,000 units could be sold at $36 per unit, Delphi’s management has allocated only enough manufacturing capacity to produce a maximum of 25,000 units of the new product annually. The fixed expenses associated with the new product are budgeted at $450,000 for the year. The variable expenses of the new product are $16 per unit. 

Required:

a. How much units of the new product must Delphi sell during the next fiscal year in order to break even on the product?

b. What is the profit Delphi would earn on the new product if all of the manufacturing capacity allocated by management is used and the products is sold for $36 per unit? 

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