REI is a cooperative that focuses on the great out-of-doors. Although anyone can shop at REI, the firm is owned by the members who pay a one-time fee of $20 and receive annual dividends based on company profit and the amount of each member's annual purchases.

A marketing manager was interested in a new line of off-piste skis for skiing over rugged terrain and jumping off cliffs. The manager works with James Smelter in inventory to place the following orders for two different skis.

RECREATIONAL EQUIPMENT INC. (REI)

www.REI.com

Facts:

? 1938: Established by 23 mountaineers

? 2001: Exceeded 2 million members

? 2005: Annual sales passed $1 billion

? 2011: Nearly $100 million sent to members

Assume that operating expenses at REI are 22% of cost and determine the amount of any profit on these skis. If there was no profit, find the amount of the operating loss and/or the absolute loss.

Model Name Number Total Cost 1st order Steep Alpine 15 pairs 2nd order Cliff Hoppers 22 pairs $4395 $7194