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Question
Benny and Frieda are art students who often received compliments on the t-shirts they designed and made themselves. In need of funds for fall semester, they decide to sell these t-shirts at a small stand at the South Haven Beach during the summer. Rent on the beach stand is $1,600 per month. Variable costs per t-shirt are $4.75.
a. Complete the following table which estimates total costs and cost per t-shirt at the indicated levels of activity for this t-shirt stand. Round the costs per t-shirt to two decimal places.
| Number of t-shirts sold in one month | |||
| 1,000 | 1,500 | 2,000 | |
| Total fixed cost | |||
| Total variable cost | |||
| Total cost | |||
| Cost per t-shirt sold | |||
b. Benny and Frieda need to each earn $5,000 before the fall term starts. They plan to sell the t-shirts for $15.
Will they be able to meet their goal? Support your comments with computations.
What other factors might affect this business venture?
Answer
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