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Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site daycare and
Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site daycare 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: Variable Costs $4.20 per unit produced Direct Materials per unt d S0.40 Variable Manufacturing Overhead $4.20 per unit donated Shipping Fixed Costs Salaries $32,000 per month ino Production Equipment $52,000 per month Answer each of the following independent questions. 1. Assume that the price f each sweatshirt sold is $40. a. 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 b. How much contribution margin is lost on each unit donated to charity? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Contribution Margin per unit C. If one sweatshirt s donated for each one sold, what is the weighted-average contribution margin per unit produced? (Round your answers to 2 decimal places.) Weighted-Average Contribution Margin per unit d. How many total units must be produced to break-even? How many must be sold and how many donated? Sold Donated Total 2. If the company expects to sell 6,000 sweatshirts and donate 6,000 sweatshirts per month, what price must be charged to earn a target profit of $33,600 per month? per unit Price 3. Assume that Hoodys for Good's managers are trying to decide whether to set the price at $50 or $70. If the price is set at $50, they think they can sell 11,200 units (and donate 11,200 units). If the price is set at $70, they only expect to be able to sell (and donate) 7,000 units. a. If the company's goal is o maximize economic profit, what price should they charge? Price f the company's goal is to do the most social good, what price should they charge? Price
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