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Harry's Custom Printing (HCP) sells a variety of jackets and hats which can be custom embroidered with the name and logo of an organization. Harry
Harry's Custom Printing (HCP) sells a variety of jackets and hats which can be custom embroidered with the name and logo of an organization. Harry Stephenson, the owner, is thinking of expanding his sales by hiring university students, on a commission basis, to sell hats embroidered with the name and mascot of the university to their fellow students. These hats would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique embroidery required. The hats would cost Harry $8 each with a minimum order of 75 hats. Any additional hats would have to be ordered in increments of 75. Since Harry's plan would not require any additional facilities, the only costs associated with the project would be the costs of the sales commissions and the costs of the hats. The selling price of the custom hats would be $13.50 each. Harry would pay the students a commission of $1.50 for each hat sold. Required: A) What's the minimum level of sales dollars needed to break even? What's the minimum level of units needed to break even? Show your work. B) Harry likes the idea of giving students work but also could spend this time and money on a different project which will earn him $400/month for 3 months. Therefore, to go ahead with this plan, Harry needs to see at least a $1,200 profit for the first three months. What level of unit sales and dollar sales would be required to reach this target profit? Show your work. (Round your intermediate calculations to 2 decimal places.)
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