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.

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 = $3000

j.

Travel Expenses for Conference (e.g. airfare, meals, taxi) = $120