Order 1 Order 2 Order 3 Average order
Number of t-shirts 30 60 300 50
Front of the shirt
Number of art designs 1 1 1 1
Number of colors 1 2 2 1
Back of the shirt
Number of art designs 1 0 1 1
Number of colors 2 0 2 1
Questions ：
1. How would you describe University Tees’ strategy? What risks does University Tees face that may threaten the attainment of its strategic objectives?
2. What key factors influence the prices that companies establish for their products and services?
3. Define the cost driver for each of University Tees’ variable costs. Without calculating any numbers, would you expect the total variable cost expressed on a per t-shirt basis for high volume orders to be higher or lower than the total variable costs expressed on a per t-shirt basis for low volume orders? Explain your answer.
4. What is the total variable cost expressed on a per t-shirt basis for each of the four order scenarios in the case?
5. What bid price per t-shirt would you establish for each of the four order scenarios in the case
(round your answer to the nearest dollar)? Would your answer differ depending on whether each
order was placed by a repeat customer or a new customer? Why or why not? 本文来自优'文,论-文·网原文请找腾讯324.9114
6. Are University Tees’ fixed costs relevant to its pricing decisions? Why or why not?
7. Assuming that all of University Tees’ sales conform to its average order profile, use your recommended selling price to determine the number of t-shirts that must be sold to break even. Also, prepare a contribution format income statement that shows University Tees’ net operating income if it sells 15,000 t-shirts at your recommended price.
8. Assume that all of University Tees’ sales conform to its average order profile. Prepare two contribution format income statements: (a) assume 12,000 units are sold at a price of $9 per t-shirt and (b) assume 8000 units are sold at a price of $10 per t-shirt. What insights about the relationship between price, quantity sold, and profits are revealed by these income statements?
6. Implementation guidance
The University Tees case is intended for sophomore-level managerial accounting classes. The case strikes an appropriate balance between offering a realistic business context that will engage students and providing the simplicity that is necessary for an introductory course. This balance is an important contribution of this case, given that a majority of cases are written for an MBA audience and possess too much complexity for sophomores.
Students will need prerequisite knowledge in six areas to successfully analyze the case. First, they will need an elementary introduction to the concepts of strategy and business risks. Second, they will need to understand the difference between variable and fixed costs. Third, they will need to understand how to compute a breakeven point. Fourth, they will need to understand how to prepare contribution format income statements. Fifth, they will need a basic understanding of the meaning of relevant costs. Sixth, the case will generate a more engaging discussion if students have been introduced to some fundamental pricing concepts, such as cost-plus pricing and market-based pricing.
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