Company Financial Information For New Division: Mountain Sporting Goods, Inc.

An existing sporting goods manufacturer is creating a separate division to manufacture basketballs under a private label for a major retail chain.

The retail chain has guaranteed an order of $5,000$ basketballs per month during the first year and will pay $$12$ per basketball.

The retailer has asked for terms that allow them to pay for its purchases in $60$ days.

Each basketball costs the sporting goods company $$5\mathrm{.}50$ to manufacture.

The operating expenses of the new division are expected to be $$5,500$ per month,

The division's profits are subject to a $21\%$ corporate tax rate $($paid monthly$).$

The division will manufacture and begin shipments January $2024.$