Toy Box, Inc., is contemplating expanding sales of their children’s toys. The ha

Question

Toy Box, Inc., is contemplating expanding sales of their children’s toys. The have an opportunity to stock and sell the X toy that has been a big hit with children everywhere. They must order the X toys from the manufacturer in a minimum order of 100 at a cost of $12 each. They could resell the X toy in their store for $22 each. Due to anticipated demand, Toy Box, Inc., will need to hire an additional part-time cashier at $600 a month, which will be classified as a fixed-cost attributable to the X toy. In addition, they have offered a $1 sales commission per toy to their floor sales representative. Finally, they will include a package of trading cards with every purchase of an X toy, which will cost them an additional $2 each. Instructions: In a well-written paper, answer the questions and perform the calculations described below: To make the project worthwhile, Toy Box, Inc., would require a $5,000 profit per month. What level of sales, in units and in dollars, would be required to reach this target profit? Show all computations completely, in a table inserted into your document. Assume that the venture is undertaken and an order is placed for 100 X toys. What would be Toy Box’s break-even point in units and in sales dollars? Show computations completely in an inserted table, and explain the reasoning behind your answer. You can ignore the fixed cost of $600 for this part.

I have already figured out the first part. The second part is where I am confused with because I can't seem to get a whole number. It says to ignore the $600 FC but there is still a FC of $1,200, I think, because 100 shirts x $12 cost of shirt. Then I figured that the contribution margin was 19 because 22-1-2. If this isn't right, please correct me! I only need help with the second part.

Explanation / Answer

Answer: 10x - (600 + 3x ) = 5000 -- I used 10 because that is the profit they get off every toy
10x -600 - 3x = 5000
7x = 5600
x = 800

check...
12 (800) = 9600 -- what Toy Inc paid
22 (800) = 17600 -- what they were sold for
profit of 8000

600 + x + 2x
600 + 3x
600 + 3(800) = 600 + 2400 = 3000 -- this is what Toy Inc. pays monthly

Toy Box Inc. bought 800 X toys. They paid 9600 for them and they sold them for 17600. Their profit for the selling of the X toys is 8000. However, they had to pay the part time employer 600 + 1 for every toy sold + 2 (per toy sold) for trading cards.....totaling 3000.

Their total profit is 8000 - 3000 = 5000

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