Becky Shelton, a marketing coordinator for Douglass Ente company's annual fund-raising project. The T-shirts are pr upply of T-shirts has been insufficient to satisfy the numb hirts are normally donated to some charitable organizati ach. Ms. Shelton has decided to order 700 shirts.
Becky Shelton, a marketing coordinator for Douglass Ente company's annual fund-raising project. The T-shirts are pr upply of T-shirts has been insufficient to satisfy the numb hirts are normally donated to some charitable organizati ach. Ms. Shelton has decided to order 700 shirts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Becky Shelton, a marketing coordinator for Douglass Enterprises, is in charge of ordering the T-shirts to be sold for the
company's annual fund-raising project. The T-shirts are printed with a special Douglass Enterprises logo. In some years, the
supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-
shirts are normally donated to some charitable organization. T-shirts cost the company $7 each and are normally sold for $14
each. Ms. Shelton has decided to order 700 shirts.
Required
a. If the company receives actual sales orders for 625 shirts, what amount of profit will the company earn? What is the cost of
waste due to excess inventory?
b. If the company receives actual sales orders for 740 shirts, what amount of profit will the company earn? What amount of
opportunity cost will the company incur?
a. Profit
a. Waste due to excess inventory
b. Profit
b. Opportunity cost
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