Arlo's T-Shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities cost. Arlo's sells the T-shirt for $14.50 each. Management has prepared the following estimated cost information for next month:

At $8,000

T-shirt cost: $48,000

Rent cost: $3,600

Utilities cost: $6,800

At $10,000

T-shirt cost: $60,000

Rent cost: $3,600

Utilities cost: $8,300

Assume that all of the activity levels menti9oned in this problem are within the relevant range.

Required:

a. Calculate what Arlo's should expect for total variable cost if 9,000 T-shirts are sold next month.

b. Prepare Arlo's contribution approach income statement for a monthly sales volume level of 10,000 T-shirts.

c. Compute the operating leverage for Arlo's at the monthly sales volume level of 10,000 T-shirts.

d. Compute the break-even point for Arlo's in sales units and in sales dollars.

e. Compute the margin of safety for Arlo's in dollars and as a percentage at the monthly sales volume level of 10,000 T-shirts.