please answer part 2 Break-even poin for unitsales Break-even poin in dollar sal
ID: 2329098 • Letter: P
Question
please answer part 2
Break-even poin for unitsales
Break-even poin in dollar sales.
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 $1700 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 commissions. The selling price of the sweatshirts would be $34.00 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 $6,750? 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 750 sweatshirts Dollar sales needed to attain the target profit $ 25,500 2. Break-even point in unit sales sweatshirts Break-even point in dollar salesExplanation / Answer
2. Break-even point in unit sales: 0 sweatshirts
Break-even point in dollar sales: $0
Break-even point is the volume at which there is no profit or loss since the total revenues equal the total costs.
Since there are no fixed costs, even if one unit is sold, there would be a profit to the extent of the contribution margin which is $34 - $17 - $8 = $9. Hence, the break-even point in unit and dollar sales is zero.
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