Question

You are an entrepreneur who will be starting a t-shirt business. Your company will rent space inside the mall. You will buy plain t-shirts and imprint them with one of twelve pictures exclusively designed for your company by a famous artist who is a friend of yours. Your target customers are teenagers and young adults and you plan on selling your t-shirts for $15 each. Your business is scheduled to open on January 1, 2020. Below is the cost information for your company:

1. The mall charges you $2,500 rent per month which includes utilities, telephone, cleaning, and maintenance. You estimated that 90% of the rent is related to operations and 10% is related to selling and administrative activities.
2. You will purchase white, cotton t-shirts from a wholesaler for $3.75/shirt.
3. You agree to pay your artist friend a $10,000 annual contract fee for designing 12 new t-shirts each year for your business.
4. You will buy a computer and printer that cost $6,000 which is expected to last 3 years with no salvage value. You will use straight-line depreciation method. You estimate 90% of the computer and printer will be used for operations and 10% will be used for selling and administrative activities.
5. You purchase a heat press machine for $4,500 which is expected to last 3 years with no salvage value. The machine is used only for imprinting the t-shirts.
6. You will purchase transfer paper that cost $400/case and contains 1,000 sheets of transfer paper. One sheet of transfer paper will be used to print one t-shirt.
7. You will purchase ink-jet cartridges that cost $50 and can make 500 prints. Each t-shirt requires one print. You will also need to print flyers for selling and administrative purposes. For this non-manufacturing printing, you will print about flyer for every 5 t-shirts sold.
8. You will purchase laser paper for $20/ream which contains 200 sheets of laser paper.
9. You will hire three part-time employees. You will pay each employee $8/hour. On average printing 10 t-shirts will take one hour of labor.
10. You will do all of the selling and administrative work by yourself and will be paid $12,000/year.
11. To protect your business from legal obligations, you will purchase a liability insurance that cost $3,600/year.

Phase One Requirements:

1. Come up with an attractive name for your business.
2. Determine which and how much of your costs are variable costs. List the manufacturing and non-manufacturing cost items and present each of them in cost per T-shirt basis.
3. Determine which and how much of the costs are fixed costs. List the manufacturing and non-manufacturing costs items and present each of them in total cost per month.
4. Calculate the contribution margin, break-even point, and target profit.

**Please provide as many details as possible, and clearly mark/label items in a spreadsheet please

Answer 1