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The Shirt Works sell a large variety of tee shirts and sweat shirts. Steve Hooper, the...

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Accounting

The Shirt Works sell a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his salesby hiring high school students , on a commission sales basis, tosell sweatshirts bearing the name and mascot of the local highschool.

These sweatshirts would have to be ordered from themanufacturer six weeks in advance, and they could not be returnedbecause of the unique printing required. The sweatshirts would costHooper $8 each with a minimum order of 75 sweatshirts. Anyadditional sweatshirts would have to be ordered in increments of75.

Since Hooper's plan would not require any additionalfacilities, the only costs associated with the project would be thecosts of the sweatshirts and the cost of the sales commissions. Theselling price of the sweatshirts would be $13.50 each. Hooper wouldpay the students a commission of $1.50 for each t shirt sold.

Required:

1: What level of unit sales and dollar sales is needed toattain a target profit of $1,200?

2: Assume Hooper places an initial order of 75 sweatshirts.What is his break even point in unit sales and dollar sales?

Answer & Explanation Solved by verified expert
4.1 Ratings (681 Votes)
Sale Price1350Less cost800Less Sale commission150Contribution4001Target Profit120000Fixed    See Answer
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