Question

Baird Entertainment sells souvenir T-shirts at each rock concert that it sponsors. The shirts cost $13 each. Any excess shirts can be returned to the manufacturer for a full refund of the purchase price. The sales price is $28 per shirt. Required What are the total cost of shirts and cost per shirt if sales amount to 5,000, 5,500, 6,000, 6,500, or 7,000?

Number of shirts sold	5,000	5,500	6,000	6,500	7,000
Total cost of shirts
Cost per shirt

Answer 1

Solution:-

Total cost of shirt and cost per shirt at different sales level will be as follows :-

Number of shirts sold	5000	5500	6000	6500	7000
Total cost of shirts (No.of Sold unit X $13)	$65000	$71500	$78000	$84500	$91000
Cost per shirt( Total cost of shirts/No of shirts sold)	$13	$13	$13	$13	$13

Note :- Total cost of shirt is variable in nature here and variable cost of per unit shirts remains constant and in cash of total cost they changes proportionately with change of sales units