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Haya is considering a business venture - selling custom - embroidered T - shirts from a pushcart kiosk at University Market. The T - shirts
Haya is considering a business ventureselling customembroidered Tshirts from a pushcart kiosk at University Market. The Tshirts will be available in different colors and onesize fits all. The Tshirts unique feature is that almost any name, phrase, or logo can be stitched onto the Tshirt while the customer waits. Thus, a customer can obtain a Tshirt with his or her own name, special saying, or favorite logo in a wide variety of thread colors, sizes, and fonts. Based on preliminary market research and input from the franchising company, Haya plans on selling each embroidered Tshirt for $
Haya plans to acquire the necessary technology by obtaining a franchise from KM Company. KM Company sells all of the necessary equipment and technology and provides the inventory of Tshirts and other supplies. In addition, KM Company trains prospective franchisees such a Haya in the basics of running the business and operating the machines.
Haya will need to buy the Tshirts from KM Company for $ per Tshirt and pay a royalty to the franchising company of $ per Tshirt sold. In addition, Haya believes that each Tshirt will use about $ worth of supplies including thread, replacement of sewing needles, machine maintenance, etc. Finally, KM Company requires that each franchisee invest $ per month on leaflets and brochures to advertise the product.
Haya discovers that University Market would supply her with the pushcart and all of the necessary equipment for proper display. The license from the Market also allows Haya to use electrical outlets and two telephone outlets. University Market will pay for Hayas electricity consumption, but she will have to obtain two business telephone lines at a cost of $ per line per month. University Market is willing to license the space and equipment to Haya on a monthly basis for $ per month.
To generate maximum sales, Haya wants to keep the pushcart open for business from AM to PM Monday through Friday, and from AM to PM on Saturday and Sunday. Haya is willing to put in hours at the kiosk, and she can obtain additional parttime help at $ per hour only one individual is required to operate the business Hayas only other significant expense is setting up to accept credit cards. Haya anticipates that of her sales will be credit card sales, and the credit card company charges Haya a fee of of the selling price.
Required:
a Write down the expression for Hayas monthly profit. Assume that there are exactly weeks per month
b Calculate Hayas monthly breakeven point in Tshirts. What does this translate to in revenue?
c How much profit would Haya earn in a month if she sold Tshirts? How many Tshirts would Haya have to sell to earn a target profit of $ per month?
d Haya just remembered that she did not include taxes. How will that affect part C
e What do you think of Hayas businessventure
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