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 costs

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 = $3,000

j. Travel Expenses for Conference (e.g.. airfare, meals, taxi) = $1,200

Break-Even Analysis. Calculate how many units need to be sold to break even, based on the costs provided above. Assume that only one conference will be attended and the estimated expenses associated with this conference are on target. Use the information above, except do not consider taxes.