Tray has a T-shirt business that buys shirts from a wholesaler for four dollars each and sells them to retailers for eight dollars each. He imprints each shirt with a picture of a musical artist that costs him two dollars. He also pays his cousin to do the printing at five dollars an hour. LaShawn prints five shirts per hour. A retailer offers to buy 1000 shirts at seven dollars each. Should Tray agree to the deal?
A) Yes, Tray will make a profit of one dollar per shirt.
B) No, Tray will not make a profit at this price.
C) Yes, Tray will make a marginal profit at this rate.
D) Yes, even though he may lose money he can make up for it in volume.

Question

Quizplus · Accepted Answer

To determine if the retailer's offer is profitable, we need to calculate Tray's total cost per shirt:

- Wholesale cost per shirt: $4 
- Imprinting cost per shirt: $2 
- Cousin's printing labor cost per shirt: $5/5 = $1 
Total cost per shirt: $4 + $2 + $1 = $7

Since the retailer is offering to buy shirts for $7 each, Tray will not make a profit at this price. Therefore, he should not agree to the deal.

Tray Has a T-Shirt Business That Buys Shirts from a Wholesaler