Three university students decided to operate an on-campus business producing and selling novelty t-shirts that also promoted their university name. They were able to secure the use of a room in one of the campus buildings for a charge of $800.00 total for the school year. The students decided that they each wanted $2000 income for the year for operating the business. Advertising and promotion costs were estimated at $400 for the year. They decided that the selling price for the t-shirts would be $12.00, and their best estimate of required sales to break even was 1800 shirts. C) What was the margin as a percentage of the sales? D) What was the margin as a percentage of the cost?
Three university students decided to operate an on-campus business producing and selling novelty t-shirts that also promoted their university name. They were able to secure the use of a room in one of the campus buildings for a charge of $800.00 total for the school year. The students decided that they each wanted $2000 income for the year for operating the business. Advertising and promotion costs were estimated at $400 for the year. They decided that the selling price for the t-shirts would be $12.00, and their best estimate of required sales to break even was 1800 shirts. C) What was the margin as a percentage of the sales? D) What was the margin as a percentage of the cost?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Three university students decided to operate an
on-campus business producing and selling
novelty t-shirts that also promoted their
university name. They were able to secure the
use of a room in one of the campus buildings for
a charge of $800.00 total for the school year.
The students decided that they each wanted
$2000 income for the year for operating the
business. Advertising and promotion costs were
estimated at $400 for the year. They decided
that the selling price for the t-shirts would be
$12.00, and their best estimate of required sales
to break even was 1800
shirts.
C)
What was the margin as a percentage of the
sales? D) What was the margin as a percentage
of the cost?
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