The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring local high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Mr. Hooper 8 the following with a minimum order of 75 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 75.Since Mr. Hooper's plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be 13.50 the following Mr. Hooper would pay the students a commission of 1.50 for the following shirt sold.
(a) To make the project worthwhile, Mr. Hooper would require a 1,200 profit for the first three months of the venture. What level of sales in units and in dollars would be required to reach this target net operating income? Show all computations.