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Busi 2210

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Dog Cove Knitworks (DCK)is a new company that will produce hand-knit sweaters. Each of the company’s six partners has designed three different sweaters. They have made up samples of each design and have determined that, on average, the sweaters each take about seven hours to knit. Materials cost per sweater average $19. The partners have decided that initially they will work for only $8 per hour, in anticipation of reasonable profits in the future. They intend to sell the sweaters directly to consumers through craft fairs. They have budgeted $7,000 to cover the various costs associated with participation in craft fairs (book rental, display costs, travel expenses, etc).
a. The partners at DCK have made estimates of market and sales potential for their products. They estimate that demand for 2005 will be at least 1000 sweaters. What is the lowest price they should charge in order to break-even? b. The partners want to make 25% profit on cost. What price should they set to achieve that objective? c. How many sweaters do they need to sell at the price in b to break even?

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