Sandra Kendricks, Kickin It Apparel - Coursework Example

Assume that she decides to pay herself a 15 percent commission instead of the monthly salary of $3,000. Recalculate her projected monthly income statement based on this scenario. 3. Sandra suspects that she might be underestimating the amount of time needed to manufacture a dress. Sandra estimates that, on average, each dress will require three hours of direct labor at a cost of $1 O/hour. Assume that in reality it takes five hours to manufacture a single dress. Recalculate the economics of one unit and projected monthly income statement based on this scenario.

A way for Sandra to increase her profits is by increasing the sales price of her merchandise. Two additional ways to increase profits is by lowering the cost of materials and direct labor costs per unit. Sandra could pay the minimum salary of $7.25 an hour instead of $10.00 an hour for direct labor. Sandra and Kickin’ It are not the same entity. The company could make money, but this does not mean that Sandra is better off running the company than working elsewhere. If the sum of Sandra’s salary and the net profit of the business are less than what Sandra was making working full time Sandra is not better off as a manager of the business.

Sandra could go back to work full-time and hire a manager that makes $1,500 a month instead of the $3,000 a month she allocated for her salary. This way Sandra would have a full time salary and the business would generated under the original scenario $4,320. The pricing strategy the Kickin’ It Apparel is using is a penetration strategy. The company just got its first order and the pricing strategy used was to set the sales price low in order to gain market share. The firm seeks to satisfy its first customer in order to gain penetration into the fashion industry.

Once the first deal goes through the company expects to gain recurrent business from that strategy. Upon further researching the fashion industry my assessment is that the