Question

Assume that a company sells customized sweatshirts for $15 per unit. It pays a sales commission of $5 per unit sold. The company must buy sweatshirts from its supplier in batches of 100 units at an average unit cost of $7 per sweatshirt. The number of sweatshirts the company would need to sell to earn a target profit of $1,710 is closest to:

Answer 1

Answer:

The  The number of sweatshirts the company would need to sell to earn a target profit of $1,710 is closest to 570 sweatshirts.

Explanation:

This can be calculated as follows:

Selling price per unit = $15

Total cost price per unit = Average unit cost + Sales commission per unit = $7 + $5 = $12

Profit per unit = Selling price per unit - Total cost price per unit = $15 - $12 = $3

Target profit = $1,710

Number of sweatshirts to sell to earn a target profit = Target profit / Profit per unit = $1,710 / 3 = 570