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 $$3\mathrm{.}80$ per unit produced

Direct Labor $$3\mathrm{.}30$ per unit produced

Variable Manufacturing Overhead $$0\mathrm{.}50$ per unit produced

Shipping $$3\mathrm{.}80$ per unit donated

Fixed Costs

Salaries $$28,000$ per month

Advertising $$68,000$ per month

Production Equipment $$48,000$ per month

Required:

Answer each of the following independent questions.

$1.$ Assume that the price of each sweatshirt sold is $$35.$

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?

sold$=$

donated$=$

total$=$

$2.$ If the company expects to sell $4,000$ sweatshirts and donate $4,000$ sweatshirts per month, what price must be charged to earn a target profit of $$28,000$ per month?

$3.$ Assume that Hoodys for Good's managers are trying to decide whether to set the price at $$45$ or $$65.$ If the price is set at $$45,$ they think they can sell $10,800$ units $($and donate $10,800$ units$).$ If the price is set at $$65,$ they only expect to be able to sell $($and donate$)6,500$ 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?