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 $20.00 each with a minimum order of 200 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 $40.00 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 $12,350? 2. Assume that Hooper places an initial order for 200 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.)
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 $20.00 each with a minimum order of 200 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 $40.00 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 $12,350? 2. Assume that Hooper places an initial order for 200 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:X Answer is complete but not entirely correct.
1.
Unit sales needed to attain the target profit
950
sweatshirts
Dollar sales needed to attain the target profit
$
38,000
2.
Break-even point in unit sales
415 X sweatshirts
Break-even point in dollar sales
2$
16,615 X
Transcribed Image Text: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 $20.00 each with a minimum order of 200 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 $40.00 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 $12,350?
2. Assume that Hooper places an initial order for 200 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.)
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