6. Imagine you are a member of a student organization and you have decided to do

ID: 2561074 • Letter: 6

Question

6. Imagine you are a member of a student organization and you have decided to do a fundraiser for a trip you will take later this year. You have decided to sell T-shirts and Sweatshirts at DCOBA to raise money. You have found a supplier that will sell you the T-shirts at $5.00 each and the Sweatshirts for $10.00 each. Your organization can add on a markup onto those costs when you sell the apparel to students, and keep the profit for your organization. At the end of the first week, sales are high Your organization is excited by the success and would like to start selling in the student center as well You expect to sell at least twice as many shirts, so you'll be increasing your order from the supplier. The supplier might be willing to give you a discount, since the order will be large. Your goal is to get a 60% return on sales on the T-shirts and a 40% return on sales on the Sweatshirts. Your price for the T-shirts will still be $10.00 and $15.00 for the Sweatshirts. To achieve these goals, what cost will you need to request from the supplier?

Explanation / Answer

Solution:

T-Shirt

Sweatshirts

Unit Selling Price (A)

$10

$15

Desired Return on Sales (B)

(60% Return on Sales $10)

(40% Return on Sales $15)

The Cost need to request from the supplier

($10 - $6)

($15 – 6)

To achieve the desired return goal, the will need to request from the supplier is as follows:

Cost of T-Shirt from the Supplier = $4 per T-shirt

Cost of Sweatshirts from the Supplier = $9 per Sweatshirt

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