Problem
1) A small manufacturer of specialty dolls and doll accessories invests $1,000,000 in materials and labor to make 25,000 dolls. The cost to package, advertise, sell and ship the dolls amounts to $245,500. What is the doll manufacturer's return on investment if only 18,000 dolls sell this year at $75 each?
2) What would have been the return on investment in the question above if the doll manufacturer had made only 18,000 dolls, just enough to meet demand? Assume the cost to package, advertise, sell and ship the dolls is still $245,500 and the unit cost in materials and labor is the same for 18,000 dolls, as it is for 25,000.