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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 day care
Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site day care 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 Direct Labor $3.00 per unit produced $2.50 per unit produced Variable Manufacturing Overhead $0.50 per unit produced Shipping Fixed Costs Salaries Advertising Production Equipment $3.00 per unit donated $20,000 per month $60,000 per month $40,000 per month Required: 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? b. How much contribution margin is lost on each unit donated to charity? c. If one sweatshirt is donated for each one sold, what is the weighted-average contribution margin per unit produced? d. How many total units must be produced to break even? How many must be sold and how many donated? 2. If the company expects to sell 5,000 sweatshirts and donate 5,000 sweatshirts per month, what price must be charged to earn a target profit of $20,000 per month? 3. Assume that Hoodys for Good's managers are trying to decide whether to set the price at $40 or $60. If the price is set at $40, they think they can sell 10,000 units (and donate 10,000 units). If the price is set at $60, they only expect to be able to sell (and donate) 6,000 units. a. If the company's goal is to maximize economic profit, what price should they charge? b. If the company's goal is to do the most social good, what price should they charge? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that the price of each sweatshirt sold is $30. How much contribution margin is earned on each unit sold to a paying customer? Contribution Margin per unit < Req 1A Req 1B > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that the price of each sweatshirt sold is $30. How much contribution margin is lost on each unit donated to charity? (Round your answer to 2 decimal places. Negative amounts should be indicated by a minus sign.) Contribution Margin per unit < Req 1A Req 1C > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that the price of each sweatshirt sold is $30. If one sweatshirt is donated for each one sold, what is the weighted- average contribution margin per unit produced? (Round your answer to 2 decimal places.) Weighted-Average Contribution Margin per unit < Req 1B Req 1D > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that the price of each sweatshirt sold is $30. How many total units must be produced to break even? How many must be sold and how many donated? Sold Donated Total < Req 1C Req 2 > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Req 1D If the company expects to sell 5,000 sweatshirts and donate 5,000 sweatshirts per month, what price must be charged to earn a target profit of $20,000 per month? Price per unit < Req 1D Req 3A > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that Hoodys for Good's managers are trying to decide whether to set the price at $40 or $60. If the price is set at $40, they think they can sell 10,000 units (and donate 10,000 units). If the price is set at $60, they only expect to be able to sell (and donate) 6,000 units. If the company's goal is to maximize economic profit, what price should they charge? Price < Req 2 Req 3B > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req 1D Req 2 Req 3A Req 3B Assume that Hoodys for Good's managers are trying to decide whether to set the price at $40 or $60. If the price is set at $40, they think they can sell 10,000 units (and donate 10,000 units). If the price is set at $60, they only expect to be able to sell (and donate) 6,000 units. If the company's goal is to do the most social good, what price should they charge? Price < Req 3A Req 3B >
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