Question

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 320 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 50.

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 $7,200?

2. Assume that Hooper places an initial order for 320 sweatshirts. What is his break-even point in unit sales and dollar sales? (Round your intermediate calculations and final answers to the nearest whole number.)

	1. Unit sales needed to attain the target profit sweatshirts Dollar sales needed to attain the target profit 2. Break-even point in unit sales sweatshirts Break-even point in dollar sales

Answer 1

Solection & | Amount (6) I 32 (16) pasticulars selling price of sweat shirt per unit Less cost of sweat shirt per unit ress's commission per unit profit contribution per unit Target profit = 7200 (7) Unit sall needed of obtained profit $ (1200 ) Dollar sale needed to than target profit (800232) 25 600 selling price per unit Less's variable cost contribution 25 Slas Fixed cost at 3g0 units (320x16) 204.8 Breas even point in unit sale & 205 Breaks even point in dollar sale (211332) 6560

1. Unit Sales needed to attain the target profit=800 Sweatshirts sales needed to attain the target profit $25600 Dollar Break-even point Break-even point in unit sales & in dollar sales = 90s Sweatshirts $6560