Problem I 15 Points
Aldo’s T-shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities cost.
Aldo’s sells the T-shirt for $14.50 each. Management has prepared the following estimated cost information for next month:
|
|
|
At 8,000 |
At 10,000 |
|
|
|
T-shirts |
T-shirts |
|
T-shirt cost……………………. |
$48,000 |
$60,000 |
|
|
Rent cost……………………… |
$3,600 |
$3,600 |
|
|
Utilities cost…………………. |
$6,800 |
$8,300 |
Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
A. Calculate what Aldo’s should expect for total variable cost if 9,000 T-shirts are sold next month.
B. Prepare Aldo’s contribution approach income statement for a monthly sales volume level of 10,000 T-shirts.