1. Calculate the total labor costs for the year.

2. Prepare an income statement for The Daily Grind for the last year. You can assume that there are no inventories on hand at the end of the year. (All coffee and supplies purchased during the year are consumed.)

A company uses a specialty brand of Kona coffee beans costing $8 per pound. Each pound of coffee beans produces 256 ounces of coffee. Coffee is sold in three sizes: a small cup holding 8 ounces, a medium cup holding 12 ounces, and a large cup holding 16 ounces.

The cups needed to serve the coffee cost $.05 for the small cup, $.06 for the medium cup, and $.07

for the large cup. Lids cost $.03 per cup and are the same regardless of cup size. Sleeves cost an additional $.04 per cup. On average, sugar and cream cost $.02 per cup for small cups, $.03 for medium cups, and $.04 for large cups.

Labor Cost

The Daily Grind is open 12 hours each day, 7 days a week (365 days per year), and is staffed with three employees during the morning shift (7:00