Question
Break-Even Analysis: You have been asked to calculate how many units need to be sold to break even, based on the costs provided in task
Break-Even Analysis: You have been asked to calculate how many units need to be sold to break even, based on the costs provided in task #3. Assume that only one conference will be attended and the estimated expenses associated with this conference are on target. Use the information in task #3 except do not consider taxes.) *
**3. Cost Classification: The Lees have provided you with the following costs and relevant information that are assumed for year 20XY. A. Classify each of the costs (a. through j.) below under C. as a variable cost or a fixed cost. B. Explain the importance of distinguishing between variable and fixed costs. C. Prepare a budgeted income statement, assuming 600 units to be produced and sold, a per unit selling price of $85, an income tax rate of 28% and the following information. a. Cost of goods sold of $35 per unit b. Labor = $400/month One part-time employee will be hired to take care of packaging and shipping. This employee will be paid $10 per hour. He or she is estimated to work 40 hours total per month. c. Advertising fees = $3,000 d. Bank fees = $200 e. Phone/internet = $150 per month f. Shipping = $3 per unit g. Utilities = $100 per month h. Office Supplies = $900 i. Conference Exhibitor Fee = $3000 j. Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200
Classification of each of the costs as Variable and fixed cost *** please leave labor as a variable cost
a
Cost of Goods sold
Variable cost
b
labor
Variable
Part time Employee
Fixed
c
Advertising Fee
Fixed
d
bank fee
Fixed
e
Phone / Internet
Fixed
f
Shipping
Variable cost
g
Utilities
Fixed
h
Office supplies
Fixed
i
Conference Exhibitor Fee
Fixed
j
Travel Expenses for conference
Fixed
Break-Even Analysis: You have been asked to calculate how many units need to be sold to break even, based on the costs provided in task #3. Assume that only one conference will be attended and the estimated expenses associated with this conference are on target. Use the information in task #3 except do not consider taxes.) *
**3. Cost Classification: The Lees have provided you with the following costs and relevant information that are assumed for year 20XY. A. Classify each of the costs (a. through j.) below under C. as a variable cost or a fixed cost. B. Explain the importance of distinguishing between variable and fixed costs. C. Prepare a budgeted income statement, assuming 600 units to be produced and sold, a per unit selling price of $85, an income tax rate of 28% and the following information. a. Cost of goods sold of $35 per unit b. Labor = $400/month One part-time employee will be hired to take care of packaging and shipping. This employee will be paid $10 per hour. He or she is estimated to work 40 hours total per month. c. Advertising fees = $3,000 d. Bank fees = $200 e. Phone/internet = $150 per month f. Shipping = $3 per unit g. Utilities = $100 per month h. Office Supplies = $900 i. Conference Exhibitor Fee = $3000 j. Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200
Classification of each of the costs as Variable and fixed cost *** please leave labor as a variable cost
a | Cost of Goods sold | Variable cost |
b | labor | Variable |
Part time Employee | Fixed | |
c | Advertising Fee | Fixed |
d | bank fee | Fixed |
e | Phone / Internet | Fixed |
f | Shipping | Variable cost |
g | Utilities | Fixed |
h | Office supplies | Fixed |
i | Conference Exhibitor Fee | Fixed |
j | Travel Expenses for conference | Fixed |
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