Answer the following questions: LO14-4

a. J.Crew is planning a new line of jackets for fall. It plans to sell the jackets for $100. It is having the jackets produced in the Dominican Republic. Although J.Crew does not own the factory, its product development and design costs are $400,000. The total cost of the jacket, including transportation to the stores, is $45.

For this line to be successful, J. Crew needs to make $900,000 profit. What is its break-even point in units and dollars?

b. The buyer has just found out that The Gap, one of J.Crew’s major competitors, is bringing out a similar jacket that will retail for

$90. If J.Crew wants to match The Gap’s price, how many units will it have to sell?