Question
Smug Incorporated makes custom T-shirts. The firm specializes in commemorative T-shirts for large gatherings of Baby Boomers. The firm typically sells shirts for $10 each,
Smug Incorporated makes custom T-shirts. The firm specializes in commemorative T-shirts for large gatherings of Baby Boomers. The firm typically sells shirts for $10 each, and each shirt costs $3 in variable costs.
Organizers for one such gathering approached the firm asking for a special order of Kentucky Derby-themed shirt. They need 1,000 units for their order. There are two unique circumstances with this special order. First, use of the Kentucky Derby requires a $4,000 copyright payment. Second, the firm only has enough excess capacity to produce 750 units of the order.
What is the minimum acceptable price per T-shirt for this special order?
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