Help S The Shirt Works sells a large variety of tee shirts a

Help S 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 $23.00 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 thd project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $46.00 each. Hooper would pay the students a commission of $5.00 for each shirt sold. 1. What level of unit sales and dollar sales is needed to attain a target profit of $17100? 2. Assum your intermediate calculations and final answers to the nearest whole number.) e that Hooper places an initial order for 200 sweatshirts. What is his break-even point in unit sales and dollar sales? (Round 2. Break-even

Solution

1) income per unit 46-23-5 =$18 Units required for $17100 17100/18 =950 sweatshirts Dollar sales required 950*46 =$43700 2) Investment in first 200 units would be taken as fixed cost = 200*23=$4600 Varaible cost being sales commission of $5 per unit Contribution per unit = 46-5=$41 Break even point in units sales = 4600/41 = 112.19 or 150 ( in multiple of 50) break even point in dollars sales = 150*46 = $6900