Sweats galore

Business Situation After graduating with a degree in business from Eastern University in Campus Town, USA, Michael Woods realized that he wanted to remain in Campus Town. After a number of unsuccessful attempts at getting a Job in his discipline, Michael decided to go into business for himself.

In thinking about his business venture, Michael determined that he had four criteria for the new business: 1. He wanted to do something that he would enjoy. 2.

Because Jane liked Michael and was intrigued by his entrepreneurial spirit, she answered many of Michaels questions. In addition, Jane provided information concerning the type of equipment Michael Mould need for his business and its average useful life. Jane knows a competitor No is retiring and would like to sell his equipment.

Michael can purchase the equipment at the beginning of 2008, and the owner is willing to give him terms of 50% due upon purchase and 50% due the quarter following the purchase.

Cary Sue Smith, who is currently Director of Student Development at Eastern University, has approached Michael about a Job in sales. Cary Sue knows the officers of all of the student organizations on campus. In addition, she is very active in the community. Michael thinks Cary Sue can bring in a lot of business. In addition she also has clerical skills needed for the position.

Because of her contacts, Michael is willing to pay Cary Sue $1, 200 per month plus a commission of 10% of sales. Michael estimates Cary Sue will spend 50% of the workday focusing on sales, and the remaining 50% will be spent on clerical and administrative duties. Michael realizes that he will have difficulty finding a person skilled in computer graphics to generate the designs to be printed on the shirts. Jane recently hired a graphics designer in that position for Shirts and More at a rate of $500 per month plus $0. 10 for each shirt printed.

After talking with the insurance agent and the property valuation administrator for his municipality, Michael estimates that the property taxes and insurance on the machinery will cost $2, 240 annually; property tax and insurance on the display furniture and cash register will total $380 annually. Laymen reminded Michael that maintenance of the machines is required for the silk- screen process. In addition, Michael realizes that he must consider the cost of utilities. The building Michael wants to rent is roughly the same size as the building occupied by Shirts and More.