Help Save Exit Submit Check my work The Shirt Works sells a

Help Save & Exit Submit Check my work The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding h high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. is sales by hiring These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the uniíque printing required. The sweatshirts would cost Hooper $24.00 each with a minimum order of 240 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 commlssions. The selling price of the sweatshirts would be $48.00 each. Hooper would pay students a commission of $6.00 for each shirt sold. Required: 1. What level of unit sales and dollar sales is needed to attain a target profit of $11,700? 2. Assume that Hooper places an initial order for 240 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.) 1. Unit sales needed to attain the target profit Dollar sales needed to attain the target profit 2. Break-even point in unit sales Break-even point in dollar sales Prex 5 of Next

Solution

1 What is the level of Unit sales and Dollar sales is needed to attain a target profit of $11700 Targeted pofit =$11700 Varaible cost per unit =$24+$6=$30 Contribution per sewtshirt = $48-$30=$18 Contribution to sales ratio = Contribution per unit / Sale price per unit =$18/48 =37.5% Required sales in Units to attain $11700 Targeted profit = Targeted profit + Fixed cost   / Contribution per unit =$11700+$0   /$18 =650 Units Required sales in Dollars to attain $11700 Targeted profit = Targeted profit + Fixed cost   / Contribution to sales ratio   =$11700+$0   /0.375 =$31,200 2 Break even Point in Unit sales for the first order of 240 Shirts So, for only first order , the fixed cost is the Purchase cost =240*$24=$5760 Variable cost is the commission amount =$6 per unit Contribution per unit =$48-$6=$42 Break ven Units for first order = First order Cost /Contribution per unit =$5760/$42=137.14 =137 Swetshirsts (rounded off) Breakeven sales in dollars for first order =Break even point in Units *Sales Price per unit =137*$48 =$6576