Tee-Pro has three types of costs: t-shirt cost, factory rent cost, and utilities cost. This company sells its shirts for $16.50 each. Management has prepared the following estimated cost information for next month under two different sales levels.
At 10,000 Shirts................At 12,000 Shirts
T-shirt cost . . . . . . . . . . .......................... $80,000......................... $96,000
Rent cost . . . . . . . . . . ............................. . 6,000............................ 6,000
Utilities cost . . . . . . . . .............................. 8,400............................ 9,900
Required
1. Compute what the company should expect for total variable cost if 11,000 shirts are sold next month.
2. Prepare its contribution margin statement for a monthly sales volume of 12,000 jackets