FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![### School Fundraising Project Analysis
**Scenario:**
Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering T-shirts for the school’s annual fund-raising project. The T-shirts are printed with a special Kemp School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $15 each. Ms. Shelton has decided to order 800 shirts.
### Required Analysis:
#### a. If the school receives actual sales orders for 725 shirts:
- **Profit Calculation:**
- **Cost of Waste Due to Excess Inventory:**
#### b. If the school receives actual sales orders for 820 shirts:
- **Profit Calculation:**
- **Opportunity Cost:**
### Table Template for Data Entry:
\[
\begin{array}{|c|c|c|}
\hline
& \text{Profit} & \text{Waste due to excess inventory / Opportunity cost} \\
\hline
a. & & \\
\hline
b. & & \\
\hline
\end{array}
\]
---
### Calculation Details:
#### a. Scenario (725 shirts sold):
**Profit Calculation:**
- **Revenue:** \( 725 \text{ shirts} \times \$15/\text{shirt} = \$10,875 \)
- **Cost:** \( 800 \text{ shirts} \times \$7/\text{shirt} = \$5,600 \)
- **Profit:** \( \$10,875 - \$5,600 = \$5,275 \)
**Waste Calculation:**
- **Excess Inventory:** \( 800 - 725 = 75 \text{ shirts} \)
- **Cost of Excess Inventory:** \( 75 \text{ shirts} \times \$7/\text{shirt} = \$525 \)
#### b. Scenario (820 shirts sold):
**Profit Calculation:**
- **Revenue:** \( 800 \text{ shirts} \times \$15/\text{shirt} = \$12,000 \) (Only 800 shirts available for sale)
- **Cost:** \( 800 \text{ shirts} \times \$7/\text{shirt} = \$5,600 \)
- **Profit:**](https://content.bartleby.com/qna-images/question/82edd437-bc56-4a13-8033-aae688ef2d14/fe0f3459-20e8-40b9-b888-6027d07fd5da/1mwqkso_processed.png)
Transcribed Image Text:### School Fundraising Project Analysis
**Scenario:**
Becky Shelton, a teacher at Kemp Middle School, is in charge of ordering T-shirts for the school’s annual fund-raising project. The T-shirts are printed with a special Kemp School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $15 each. Ms. Shelton has decided to order 800 shirts.
### Required Analysis:
#### a. If the school receives actual sales orders for 725 shirts:
- **Profit Calculation:**
- **Cost of Waste Due to Excess Inventory:**
#### b. If the school receives actual sales orders for 820 shirts:
- **Profit Calculation:**
- **Opportunity Cost:**
### Table Template for Data Entry:
\[
\begin{array}{|c|c|c|}
\hline
& \text{Profit} & \text{Waste due to excess inventory / Opportunity cost} \\
\hline
a. & & \\
\hline
b. & & \\
\hline
\end{array}
\]
---
### Calculation Details:
#### a. Scenario (725 shirts sold):
**Profit Calculation:**
- **Revenue:** \( 725 \text{ shirts} \times \$15/\text{shirt} = \$10,875 \)
- **Cost:** \( 800 \text{ shirts} \times \$7/\text{shirt} = \$5,600 \)
- **Profit:** \( \$10,875 - \$5,600 = \$5,275 \)
**Waste Calculation:**
- **Excess Inventory:** \( 800 - 725 = 75 \text{ shirts} \)
- **Cost of Excess Inventory:** \( 75 \text{ shirts} \times \$7/\text{shirt} = \$525 \)
#### b. Scenario (820 shirts sold):
**Profit Calculation:**
- **Revenue:** \( 800 \text{ shirts} \times \$15/\text{shirt} = \$12,000 \) (Only 800 shirts available for sale)
- **Cost:** \( 800 \text{ shirts} \times \$7/\text{shirt} = \$5,600 \)
- **Profit:**
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