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a. Continue to assume that 7,800 t-shirts will be made and sold in the first year. What is your product cost per unit under absorption

a. Continue to assume that 7,800 t-shirts will be made and sold in the first year. What is your product cost per unit under absorption costing? What is your product cost per unit under variable costing?

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Per Unit Cost (Variabla) Business Costs Product or Period Cost Variable or Fixed Cost Annual Cost (Fixed) 10,000 $3,600 Artist contract Product Artist-design fee Computer/Printer Computer/Printer Depreciation Computer/Printer Depreciation- Computer/Printer Depreciation Heat Press Machine Heat Press Machine $300x 12 designs One-time startup costs not included in annual expenses One-time startup costs not included in annual expenses $5400 less residual value (S0)/3 yrs $1800 $600 less residual value (SO) / 3 years-3200 $4500 less residual value (SO) / 3 years-S1500 One-time startup costs not included in annual expenses Fixed Period Fixed $1,800 $200 $1,500 $4,500 $3,600 $27,000 Period Product Liability Insurance Mall Rent Mall Rent Owners (shared) Parties Storage Unit Inkjet Cartridges Inkjet Cartridges Laser Paper Student Workers (3) Student Workers (3) T-shirts Transfer Paper Wrapping Paper/Box 90% Product Fixed Fixed Fixed $2250 per month x 12 mos 096 Penod $250 per month x 12 mos Period (S/A) Period Product $12,000 $4,000 $1,500 $1000 per quarter x 4 qtrs $125 per month x 12 mos $50/500 prints = S0.10/print 1 print per shirt flyer print $0.10, print one every 5 shirts, so $0.10/5 $0.02 1 flyer paper $0.10, print one every 5 shirts, so $0.10/5 $0.02 $8.00/10 shirts $0.30 per shirt (DL $8/hr, make 10 shirts per hour) $8.00/20 shirts = $0.40 per shirt (DL $8/hr, fold 20 shirts per hour) Variable Variable Variable 10 Period Period 0.02 Product (Transfer) Variable Period (Folding/Wrapping) Variable Variable Variable Variable 75 Product $400/1000 sheets = S0.40/sheet 1 transfer paper per shirt Period Fixed [a)- Variable (b)- $68,200 5.69 Artist contract+ Artist design fee Printer Depreciation+ Heat Press Depreciation + Liability Insurance+Mall Rent (both)+ Owners token salary+ Parties+Storage Unit) (Inkjet cartridges (both)Laser Paper Workers (both)T-shirtsTransfer PaperWrapping Paper/Box) Y = 68,200 + 5.69x Y 68,200+5.69 (7800) 112,582.00 total mixed costs 117,000.00 15 x 7800 shirts Total Revenue at $15/shirt Net Profit @ $15/shirt $4,418.00 (117000-112582) Per Unit Cost (Variabla) Business Costs Product or Period Cost Variable or Fixed Cost Annual Cost (Fixed) 10,000 $3,600 Artist contract Product Artist-design fee Computer/Printer Computer/Printer Depreciation Computer/Printer Depreciation- Computer/Printer Depreciation Heat Press Machine Heat Press Machine $300x 12 designs One-time startup costs not included in annual expenses One-time startup costs not included in annual expenses $5400 less residual value (S0)/3 yrs $1800 $600 less residual value (SO) / 3 years-3200 $4500 less residual value (SO) / 3 years-S1500 One-time startup costs not included in annual expenses Fixed Period Fixed $1,800 $200 $1,500 $4,500 $3,600 $27,000 Period Product Liability Insurance Mall Rent Mall Rent Owners (shared) Parties Storage Unit Inkjet Cartridges Inkjet Cartridges Laser Paper Student Workers (3) Student Workers (3) T-shirts Transfer Paper Wrapping Paper/Box 90% Product Fixed Fixed Fixed $2250 per month x 12 mos 096 Penod $250 per month x 12 mos Period (S/A) Period Product $12,000 $4,000 $1,500 $1000 per quarter x 4 qtrs $125 per month x 12 mos $50/500 prints = S0.10/print 1 print per shirt flyer print $0.10, print one every 5 shirts, so $0.10/5 $0.02 1 flyer paper $0.10, print one every 5 shirts, so $0.10/5 $0.02 $8.00/10 shirts $0.30 per shirt (DL $8/hr, make 10 shirts per hour) $8.00/20 shirts = $0.40 per shirt (DL $8/hr, fold 20 shirts per hour) Variable Variable Variable 10 Period Period 0.02 Product (Transfer) Variable Period (Folding/Wrapping) Variable Variable Variable Variable 75 Product $400/1000 sheets = S0.40/sheet 1 transfer paper per shirt Period Fixed [a)- Variable (b)- $68,200 5.69 Artist contract+ Artist design fee Printer Depreciation+ Heat Press Depreciation + Liability Insurance+Mall Rent (both)+ Owners token salary+ Parties+Storage Unit) (Inkjet cartridges (both)Laser Paper Workers (both)T-shirtsTransfer PaperWrapping Paper/Box) Y = 68,200 + 5.69x Y 68,200+5.69 (7800) 112,582.00 total mixed costs 117,000.00 15 x 7800 shirts Total Revenue at $15/shirt Net Profit @ $15/shirt $4,418.00 (117000-112582)

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