The Marbury Stein Shop sells steins from all parts of the world. The owner of the shop, Clint Marbury, 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 manufacturer three months in advance, and because of the unique emblem of each college, they cannot be returned. The steins would cost Marbury $20.00 each with a minimum order of 280 steins. Any additional steins would have to be ordered in increments of 50.

 

Because Marbury's plan would not require any additional facilities, the only costs associated with the project would be the cost of the steins and the cost of sales commissions. The selling price of the steins would be $40.00 each. Marbury would pay the students a commission of $6.00 for each stein sold.

 

Required: 1. To make the project worthwhile in terms of his own time, Marbury would require a $10,500 profit for the first six months of the venture. What level of sales in units and dollars would be required to attain this target net operating income? (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole number. Omit the "$" sign in your response.)

 

Sales level in units _________steins

Sales level in dollars $

 

2. Assume that the venture is undertaken and an order is placed for 280 steins. What would be Marbury's break-even point in units and in sales dollars? (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole number. Omit the "$" sign in your response.) Break even point in units steins Break even point in sales dollars $