How many sweaters should you order this year? Break down your order by individual school. Document your calculations in your spreadsheet.
You are curious as to how much Rhonda and Steve made in their business last year. You do
not have all the data, but you know that most of their expenses relate to buying the sweaters
and having them monogrammed. You know they paid themselves $50,000 each and you
know the rent, utilities, insurance, and a benefit package for the business was about $20,000.
About how much do you think they made “before taxes” last year? If they must make their
payment to the venture capital firm, and then pay 50 percent in taxes, what was their
increase in cash last year?
2. What was your reasoning behind using the aggregate demand forecast when determining
the size of your order rather than the individual school forecasts? Should you rethink this or is
there a sound basis for doing it this way?
3. How many sweaters should you order this year? Break down your order by individual
school. Document your calculations in your spreadsheet. Calculate this based on the
aggregate forecast and also the forecast by individual school.
4. What do you think they could make this year? They are paying you $40,000 and you expect
your benefit package addition would be about $1,000 per year. Assume that they order based
on the aggregate forecast.
5. How should the business be developed in the future? Be specific and consider changes
related to your supplier, the monogramming subcontractor, target customers, and products.
Answer preview How many sweaters should you order this year? Break down your order by individual school. Document your calculations in your spreadsheet.
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