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 $21.00 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 the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $42.00 each. Hooper would pay the 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 $9,000? 2. Assume that Hooper places an initial order for 200 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.) |
|||||||||||||||||||
|
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps with 4 images
- Quality Clothing, Inc., produces skorts and jumper uniforms for school children. In the process of cutting out the cloth pieces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorge's Scrap Warehouse for $3.15 per pound. Last year, the company sold 40,000 lb. of scrap, which would be enough to make 10,000 teddy bears that the management of Quality is now interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.85. Fixed costs would increase by $95,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 10,000 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Calculate the effect on operating income. Round your answers to the nearest dollar. Sell at…arrow_forwardFreshly Farms plants 80 acres of Brussels sprouts every spring. Freshly sells its sprouts to a farmers cooperative, which sells them to a wholesaler, which sells them to retailers, which sells them to consumers. The farmers cooperative buys Freshly Brussels sprouts for $0.98 per pound. The cooperative takes a 16% margin on the cooperative's selling price. The wholesaler takes a 16% markup on the wholesaler's cost. The retailer takes a 15% margin on the retailer's selling price. How much does a consumer pay to the retailer for one pound of Freshly Farms Brussels sprouts? (Rounding: penny.) ANSWER IS: 1.59, but HOW is that the answer? Please explain.arrow_forwardTupper Inc. and Victory Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Tupper needs the machine for 950 hours and Victory needs it for 700 hours. If each company rents the machine on its own, the fee will be $85 per hour of usage. If they rent the machine together, the fee will decrease to $80 per hour of usage. Read the requirements. Requirement 1. Calculate Tupper's and Victory's respective share of fees under the stand-alone cost-allocation method. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.) Stand-alone Tupper Victoryarrow_forward
- Please answer all questions in their entirety. Please remember to use exact terminology and make the answers clear. 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 $19.00 each with a minimum order of 180 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 180. 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 commissions. The selling price of the sweatshirts would be $38.00 each. Hooper would pay the students a commission of $5.00 for…arrow_forwardHansabenarrow_forwardDiamond Boot Factory normally sells its specialty boots for $23 a pair. An offer to buy 105 boots for $16 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $8, and special stitching will add another $3 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization.$ Should Diamond Boot Factory accept or reject the special offer?arrow_forward
- 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 $18.00 each with a minimum order of 174 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 174. 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 commissions. The selling price of the sweatshirts would be $36.00 each. Hooper would pay the students a commission of $5.00 for each shirt sold. Required: 1.What level of unit sales and dollar sales is needed to attain a target profit of $9,048? 2.…arrow_forwardSdarrow_forwardWholemark is an Internet order business that sells one popular New Year's greeting card once a year. The cost of the paper on which the card is printed is $0.05 per card, and the cost of printing is $0.15 per card. The company receives $2.15 per card sold. Since the cards have the current year printed on them, unsold cards have no salvage value. Its customers are from the four areas: Los Angeles, Santa Monica, Hollywood, and Pasadena. Based on past data, the number of customers from each of the four regions is normally distributed with a mean of 2,000 and a standard deviation 500. (Assume these four are independent.) What optimal production quantity for the card? isarrow_forward
- Diamond Boot Factory normally sells its specialty boots for $35 a pair. An offer to buy 125 boots for $31 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $12, and special stitching will add another $2 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organizatioarrow_forwardThe 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 $20.00 each with a minimum order of 151 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 151. 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 commissions. The selling price of the sweatshirts would be $40.00 each. Hooper would pay the students a commission of $8.00 for each shirt sold. Required: 1. What level of unit sales and dollar sales is needed to attain a target profit of…arrow_forwardThe 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 could not be returned because of the unique printing required. The sweatshirts would cost Hooper $23.00 each with a minimum order of 168 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 168. Because 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 commissions. The selling price of the sweatshirts would be $46.00 each. Hooper would pay the 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 $11,424? 2.…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education