Instructions

The company sells steins from all parts of the world. The owner of the shop is thinking of expanding his operations by hiring college students, on a commission basis, to sell steins at the local college. The steins will bear the school emblem.

These steins must be ordered from the manufacture 3 months in advance, and because of the unique emblem of each college, they cannot be returned. The steins would cost $15 each with with a minimum order of 200. Any additional steins would have to be ordered in increments of 50.

Because the plan would not require any additional facilities, the only costs associated with the product would be the cost of the stein and the sales commission. The selling price of the steins would be $30 each. The students would be paid a commission of $6 for each stein sold.

Required: Show your work.

Create and upload an Excel spreadsheet showing your results (remember to show adequate work and use appropriate formulas).

1. To make the project worthwhile in terms of his own time, the company would require a $7,200 profit of the first six months of the venture. What level of sales in units and dollars would be required to attain this target net operating income?

2. Assume that the venture is undertaken and an order is placed for 200 steins. What would the break-even point in units and in sales dollars? Show computations, and explain the reasoning behind your answer