1. CumChan forecasts revenues of $320,000 a year. Variable costs will be $90,000 and rental expense is $70,000. Depreciation is $20,000. Create an income statement for the shop based on the estimates. The tax rate is 40 percent.
2. A firm is reviewing a project with labor cost of $6.00 per unit, raw materials cost of $22.25 a unit, and fixed costs of $10,000 a month. Sales are projected at 8,000 units over the 3-month life of the project. What are the total variable costs of the project?
$118,000
$216,000
$236,000
$178,000
$226,000