Homework SourseNumber of shirts sold and produced 125000 Sale price per shi
Number of shirts sold and produced
125,000
Sale price per shirt
$40
Direct manufacturing
$10/shirt
Setup cost
$100/setup hour
Setup hours
10,000
Shipping costs
$200/shipment
Number of shipments
4,000
Administrative cost
$8/shirt
A manufacturer of men’s t-shirts had the following information for last year.
| ||||||||||||||||
| A. | $950,000 | |||||||||||||||
| B. | $1,950,000 | |||||||||||||||
| C. | $2,750,000 | |||||||||||||||
| D. | $3,750,000 |
Solution
Sales revenue(40*125000) $5,000,000 Less:Direct manufacturing ($10*125000) $1,250,000 Less:Setup copst($100*10000 setup hours) $1,000,000 Less:Shipping costs($200*4000 shipments) $800,000 Less:Administrative cost($8*125000) $1,000,000 Operating profit $950,000.
