Financial Statements:Develop an Income Statement for 20XX, Cash Flow Statement for 20XX, and Balance Sheetas of the end of 20XXbased on the data provided below for year 20XX. All sales are collected when the sale is made and all expenses are paid when the expense is incurred. Explain the purpose of each financial statement. Income Statement Data for 20XX: Units produced and sold = 420 Sales ($80 per unit selling price) = $33600 Cost of goods sold ($30 per unit, all variable costs) = $12600 Labor = $0 (Mr. and Mr. Lee were the only ones working and did not pay themselves) Advertising fees =$2000 Bank fees = $150 Phone/internet = $1200 Shipping ($3 per unit) = $1260 Utilities = $900 Office supplies = $800 Interest expense on note payable = $350 Depreciation expense (straight line) = $800 Income tax rate = 26 % Other Financial Data for 20XX: Proceeds from sale of equipment = $3000. The equipment originally cost $1000 and had accumulated depreciation of $200. Purchase of equipment = $1600(The machine is purchased on the last day of 20XX so no depreciation expense is recorded.) Repayment of note payable = $5000 Consider any data relevant from the income statement. Balance Sheet Data forBeginning of 20XX: Cash and cash equivalents = $10000 Accounts receivable = $0 (Cash is received at time of sale) Raw materials inventory = $10500 Equipment = $5000 (This includes the $1000 cost of the equipment sold in 20XX). Accumulated depreciation = $1,000 (This includes the accumulated depreciation of200for the equipment sold in 20XX. Accounts payable = $0 (Cash is paid at the time of purchase.) Note payable = $5000 (This is the note payable which isrepaidin 20XX) Common stock = $15000 Retained earnings = $4500 Financial Ratios:Calculate the following financial ratios and explain the meaning of the results. Net Profit Margin Quick Ratio Debt-to-Equity Ratio Cost Classification:The Lee's 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 attendedand the estimated expenses associated with this conference are on target. Use the information in task #3 exceptdonot consider taxes.)