Contribution Margin - Income statement
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Problem I – 15 Points
Aldo's T-shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities cost.
Aldo's sells the T-shirt for $14.50 each. Management has prepared the following estimated cost information for next month:
|
| At 8,000 | At 10,000 |
|
| T-shirts | T-shirts |
| T-shirt cost......................... | $48,000 | $60,000 |
| Rent cost........................... | $3,600 | $3,600 |
| Utilities cost...................... | $6,800 | $8,300 |
Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
A. Calculate what Aldo's should expect for total variable cost if 9,000 T-shirts are sold next month.
B. Prepare Aldo's contribution approach income statement for a monthly sales volume level of 10,000 T-shirts.
13 years ago
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