A U.S. company is manufacturing ponchos in an Asian textile factory for $26 per unit and selling back in the US for more. DL = $7 and hour and MOH cost = $35 per unit Do the following:

1. Identify what costs are variable costs and what costs are fixed costs.

2. Identify the type of costing that will be used (i.e.job costing or process costing, traditional or

activity-based costing for assigning overhead costs)

3. Compute the break even point in units and dollars. Then calculate this with target income of

$10,000. You might need to bump up your units in a month to make this make more sense.

4. Prepare a contribution margin income statement after 1 month of sales (estimate this)