1. The contribution margin per sweatshirt would be:
Selling price... $13.50
Less variable expenses:
Purchase cost of the sweatshirts ... $8.00
Commission to the student salespersons .... 1.50 9.50
Contribution margin ... $ 4.00
Since there are no fixed costs, the number of unit sales needed to yield
the desired $1,200 in profits can be obtained by dividing the target
$1,200 profit by the unit contribution margin:
Target profit $1,200
= =300 sweatshirts
Unit contribution margin $4.00 per sweatshirt
300 sweatshirts × $13.50 per sweatshirt = $4,050 in total sales.
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