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 donatec to some charitable organization T-shirts cost the company $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 800 shirts

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter10: Deductions And Losses: Certain Itemized Deductions
Section: Chapter Questions
Problem 35P
Question

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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 800 shirts
Required
a. If the company receives actual sales orders for 745 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 820 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
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 800 shirts Required a. If the company receives actual sales orders for 745 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 820 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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