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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 Direct Materials $3.00 per unit produced Direct Labor $2.50 per unit produced Variable Manufacturing Overhead $0.50 per unit produced $3.00 per unit donated Shipping Fixed Costs Salaries $20,000 per month Advertising $60,000 per month Production Equipment $40,000 per month Answer each of the following independent questions. 1. Assume that the price of each sweatshirt sold is $30. a. How much contribution margin is earned on each unit sold to a paying customer? Contribution Margin per unit b. How much contribution margin is lost on each unit donated to charity? (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign) Contribution Margin per unit
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