Problem - 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.