Ch. 6 Large Problem Saved 2 Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site day care and education for its employees' children. The company recently started a 'one for one" program where they donate one sweatshirt for every one sold to an international charity to provide to a child in need. The customer pays the shipping cost for items purchased, but the company pays to ship to the international charities. Cost information is summarized below: Skipped Variable Costs Direct Materials $3.80 per unit produced Direct Labor $3.30 per unit produced Variable Manufacturing Overhead $9.58 per unit produced Shipping $3.80 per unit donated Fixed Costs Salaries $28,000 per month Advertising $68,000 per month Production Equipment $48,eee per month Required: Answer each of the following independent questions 1. Assume that the price of each sweatshirt sold is $35. a. How much contribution margin is earned on each unit sold to a paying customer? b. How much contribution margin is lost on each unit donated to charity? c. If one sweatshirt is donated for each one sold, what is the weighted average contribution margin per unit produced? d. How many total units must be produced to break even? How many must be sold and how many donated? 2. If the company expects to sell 4,000 sweatshirts and donate 4,000 sweatshirts per month, what price must be charged to earn a target profit of $28,000 per month? 3. Assume that Hoodys for Good's managers are trying to decide whether to set the price at $45 or $65. If the price is set at $45, they think they can sell 10,800 units (and donate 10,800 units). If the price is set at $65, they only expect to be able to sell (and donate) 6,500 units a. If the company's goal is to maximize economic profit, what price should they charge? b. If the company's goal is to do the most social good, what price should they charge? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Req 1C Reg 10 Reg 2 Reg 3A Reg 33 Assume that the price of each sweatshirt sold is $35. How much contribution margin is earned on each unit sold to a paying customer? (Round your final answers to 2 decimal places.) Contribution Margin per unit Reg 10 > Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 1C Reg 10 Reg 2 Req 3A Reg 3B Assume that the price of each sweatshirt sold is $35. How much contribution margin is lost on each unit donated to charity? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places.) Contribution Margin per unit Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 10 Reg 10 Reg 2 Reg Reg 3B Assume that the price of each sweatshirt sold is $35. If one sweatshirt is donated for each one sold, what is the weighted average contribution margin per unit produced? (Round your intermediate values to 2 decimal places. Round your answer to 2 decimal places.) Weighted Average Contribution Margin per unit Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Req 1C Req 10! Req 2 Reg 3A Reg 3B Assume that the price of each sweatshirt sold is $35. How many total units must be produced to break even? How many must be sold and how many donated? Sold Donated Total Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 10 Reg 1D Reg 2 Req 3A Req 3B If the company expects to sell 4,000 sweatshirts and donate 4,000 sweatshirts per month, what price must be charged to earn a target profit of $28,000 per month? Price per unit Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 1C Req 1D Reg 2 Reg 3A Reg 38 Assume that Hoodys for Good's managers are trying to decide whether to set the price at $45 or $65. If the price is set at $45, they think they can sell 10,800 units (and donate 10,800 units). If the price is set at $65, they only expect to be able to sell (and donate) 6,500 units. If the company's goal is to maximize economic profit, what price should they charge? Price Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 1C Req 10 Reg 2 Reg 3A Teq 3B Assume that Hoodys for Good's managers are trying to decide whether to set the price at $45 or $65. If the price is set at $45, they think they can sell 10,800 units (and donate 10,800 units). If the price is set at $65, they only expect to be able to sell (and donate) 6,500 units. If the company's goal is to do the most social good, what price should they charge? Show less Price
