Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school's annual fund-raising project. The T-shirts are printed with a special Kemp School 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 school $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 840 shirts. Required a. If the school receives actual sales orders for 775 shirts, what amount of profit will the school earn? What is the cost of waste due to excess inventory? b. If the school receives actual sales orders for 860 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur? b. Profit Waste due to excess inventory Profit Opportunity cost
Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school's annual fund-raising project. The T-shirts are printed with a special Kemp School 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 school $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 840 shirts. Required a. If the school receives actual sales orders for 775 shirts, what amount of profit will the school earn? What is the cost of waste due to excess inventory? b. If the school receives actual sales orders for 860 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur? b. Profit Waste due to excess inventory Profit Opportunity cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering the T-shirts to be sold for the school's annual fund-raising
project. The T-shirts are printed with a special Kemp School 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 school $7 each and are normally sold for $14 each. Ms. Shelton has decided to order 840 shirts.
Required
a. If the school receives actual sales orders for 775 shirts, what amount of profit will the school earn? What is the cost of waste due to
excess inventory?
b. If the school receives actual sales orders for 860 shirts, what amount of profit will the school earn? What amount of opportunity cost
will the school incur?
a.
b.
Profit
Waste due to excess inventory
Profit
Opportunity cost
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