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 Cost of goods sold of $35 per unit 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 Advertising fees $3,000 Bank fees $200 Phone internet $150 per month Shipping $3 per unit Utilities $100 per month Office Supplies $900 Conference Exhibitor Fee $3000 Travel Expenses for Conference (e g airfare, meals, taxi) $1200 2 Budget Preparation The Lees believe that production and sales could double after being on Shark Tank which is scheduled in December of 20XY They want to be prepared for this Based on the budgeted income statement calculated above for 20XY, create a new budgeted income for 20XZ assuming that the production and sales is double the level of 20XY

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 03, 2024

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

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.

Cost of goods sold of $35 per unit
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.
Advertising fees = $3,000
Bank fees = $200
Phone/internet = $150 per month
Shipping = $3 per unit
Utilities = $100 per month
Office Supplies = $900
Conference Exhibitor Fee = $3000
Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200

2. Budget Preparation: The Lees believe that production and sales could double after being on Shark Tank which is scheduled in December of 20XY. They want to be prepared for this. Based on the budgeted income statement calculated above for 20XY, create a new budgeted income for 20XZ assuming that the production and sales is double the level of 20XY.