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Plate and Claire, recent college graduates, are unable to find suitable jobs in their field of accounting. However, each has been involved with a small business of their own for the last several years, and have been doing very well. Kate is a talented seamstress, and has designed a line of fashionable blalers that are selling for $5M! each. Hate remains shocked at how fast the orders are coming in, and wonders if this could be something big. Claire also has a small but growing business. She manufactures synthetic leather belts that are selling for $5Meach, and is similarly experiencing strong cor'sumer interest. A few large retailers have started to place orders with both girls, and both are stmggling to keep up with demand. Kate and Claire are wondering if they should combine their lines and start building the business together, since there is a high amount of overtap among their customers, and they could likely achieve some synergies by combining their marketing and customer service efforts. The belts go very well with the blazers. With a solid knowledge of their accounting basics, both have kept very thorough cost and marketing data. So they decided to pull it all together and analyze it. Kate's blazers - rnanufauurl ; data \" Claire's belts - manufacturtn- data m n\" F\" 2014 900 38,500 Claire's belts - marketing data # of Belts Total Marketing Costs 2019 1,700 $11,500 2018 1,400 10,000 2017 1,100 8,500 2016 1,000 8,000 2015 1,200 9,000 2014 900 7,500 DELIVERABLE: Prepare a comprehensive report with the answers to each of the following questions. Provide all calculations in a well-organized manner, with the final answer for each part clearly stated in a complete sentence. Total report should be between 2-3 pages. QUESTIONS: 1. High-low cost estimation method a) Use the high-low method to estimate the per-unit variable costs and total fixed costs for t blazers. b) Use the high-low method to estimate the per-unit variable costs and total fixed costs for t belts. NOTE: The variable and fixed costs for each product line, blazers and belts, contain both a manufacturing and a marketing component. However, the data is recorded separately, which means FOUR separate high-low analyses must be conducted. 2. Cost-Volume-Profit (CVP) analysis, single-product a) Use CVP analysis to calculate the break-even point in units for the blazers. b) Use CVP analysis to calculate the break-even point in units for the belts. 3. CVP, multiple-product setting Merging the data together, it appears the sales mix is approximately 300 blazers and 1,200 belts each year. For this CVP analysis, assume an additional $30,000 of combined fixed costs, this will be largely customer service costs. a) Calculate the break-even point for both product lines combined.4. Cost classification a) Classify the manufacturing costs, marketing costs, and customer service costs either as production expenses or period expenses. b) For the period expenses, further classify them into either selling expenses or general and administrative expenses. 5. Sensitivity CVP analysis and production versus period expenses - Multiple-Product Setting a) If both variable and fixed production expenses (refer to Question #1) associated with the blazer increased by 5% (beyond the estimate from the high-low analysis), how many blazers and belts would need to be sold in order to earn a target income of $96,000? Assume the same sales mix and additional fixed costs in Question #3. 6. Margin of Safety a) Calculate the margin of safety (both in units and in sales dollars), assuming they sell 700 blazers and 2,500 belts next year. Ignore the suggested change in expenses in Question #5. b) What does this margin of safety mean? 7. Income statement a) Prepare a forecasted income statement (to the operating income line) for Kate and Claire, assuming they sell 700 blazers and 2,500 belts, and assuming the 5% cost increase for the blazer (variable and fixed production costs) and the additional $30,000 combined fixed costs. b) How would you suggest Kate and Claire divide the operating profit? 8. Degree of Operating Leverage a) Calculate the degree of operating leverage, with the same assumptions as Question #7. b) What does the DOL tell Kate and Claire? Do you think they should consider promotional events? Why or why not