Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides onsite day care and education for its employees' children. The company recently started a "one for one" program where, for each sweatshirt sold, it will donate one sweatshirt to an international charity to provide to a child in need. The customer pays the shipping cost for items purchased, but the company pays to ship to the international charities.
Cost information is summarized below:
Required: square
Answer each of the following independent questions.
Assume that the price of each sweatshirt sold is $
a How much contribution margin is earned on each sweatshirt sold to a paying customer?
b How much contribution margin is lost on each sweatshirt donated to charity?
c If one sweatshirt is donated for each one sold, what is the weightedaverage contribution margin per sweatshirt produced?
d How many total sweatshirts must be produced to break even? How many must be sold and how many donated?
If the company expects to sell sweatshirts and donate sweatshirts per month, what price must be charged to earn a target profit of $ per month?
Assume that Hoodys for Good's managers are trying to decide whether to set the price at $ or $ If the price is set at $ they think they can sell units and donate units If the price is set at $ they only expect to be able to sell and donate units.
a If the company's goal is to maximize economic profit, what price should they charge?
b If the company's goal is to do the most social good, what price should they charge?
