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 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.) Contribution Margin: Based on the Break-Even Analysis just performed, what is the contribution margin per unit and the total contribution margin? Expert Answer