Solved:
Answered by AI, Verified by Human Experts
The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school.
The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school.These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $16.00 each with a minimum order of 203 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 203.
Since Hooper’s plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $32.00 each. Hooper would pay the students a commission of $7.00 for each shirt sold.
Required:
1. What level of unit sales and dollar sales is needed to attain a target profit of $7,308?
2. Assume that Hooper places an initial order for 203 sweatshirts. What is his break-even point in unit sales and dollar sales? (Round your intermediate calculations, round "Break-even point in unit sales" up to the nearest whole unit and round "Break-even point in dollar sales" to the nearest whole dollar.)
3. How many sweatshirts would Hooper need to sell to earn a target profit of $8,222? (Round final answer up to the nearest whole unit.)
1. The unit and dollar sales levels needed to attain atarget profitof $7,308 are812and$25,984.2. Thebreak-even pointwith 203 sweatshirts is$4,669.3. The unit sales level needed to attain atarget profitof $8,222 is914.What is the break-even point?Thebreak-even pointrepresents the required sales units for no profit or loss to be achieved.At thebreak-even point, thetotal revenueequals thetotal costs(fixed and variable).Data and Calculations:Selling price per sweatshirt = $32Variable cost per unit = $23 ($7 + $16)Contribution marginper unit = $9 ($32 - $23)Contribution margin ratio= 0.28125 ($9/$32)Fixed costs = $0Target profit = $7,3081. Sales level to attain a target profit of $7,308 = 812 units ($7,308/$9)And $25,984 ($7,308/0.28125)2.Break-even pointwith 203 sweatshirts = $4,669 ($23 x 203)3. Target profit = $8,222Sales level to attain atarget profitof $8,222 = 914 units ($8,222/$9)Learn more aboutthe break-even pointatbrainly.com/question/21137380#SPJ1...