Problem II 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 follo

Problem II – 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.

Leave a Comment