What is the cost of waste due to excess inventory

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Reference no: EM13792265

Kate Connor, a teacher at Meadow Middle School, is in charge of ordering the T-shirts to be sold for the school’s annual fund-raising project. The T-shirts are printed with a special Meadow School logo. In some years, the supply of T-shirts has been insufficient to satisfy the number of sales orders. In other years, T-shirts have been left over. Excess T-shirts are normally donated to some charitable organization. T-shirts cost the school $7 each and are normally sold for $14 each. Ms. Connor has decided to order 770 shirts.

a. If the school receives actual sales orders for 715 shirts, what amount of profit will the school earn? What is the cost of waste due to excess inventory?

b. If the school receives actual sales orders for 800 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur?

Reference no: EM13792265

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