Arlo's T-Shirt Shop Only Has Three Costs: T-Shirt Cost, Rent

question 76

Essay

Arlo's T-shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities cost. Arlo's sells the T-shirts for $14.50 each. Management has prepared the following cost information for next month:
$\begin{array}{lcc} & \text { At } 8,000 & \text { At } 10,000 \\& \text { T-shirts } & \text { T-shirts } \\\text { T-shirt cost } & \$ 48,000 & \$ 60,000 \\\text { Rent cost } & \$ 3,600 & \$ 3,600 \\\text { Utilities cost } & \$ 6,800& \$ 8,300\end{array}$ Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
a. Calculate Arlo's total variable cost if 9,000 T-shirts are sold next month.
b. Prepare Arlo's contribution format income statement if 10,000 T-shirts are sold.

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Definitions:

Snow

Precipitation in the form of ice crystals that forms in clouds when temperatures are below freezing and falls to the ground, accumulating as a white, fluffy layer.

Phosphorus Cycling

The biogeochemical cycle that describes the movement of phosphorus through the lithosphere, hydrosphere, and biosphere.

Biological Process

A series of events or actions among molecules in a living organism that lead to a certain product or a change in the organism.

Decomposition

The process by which organic substances are broken down into simpler forms of matter, mainly by microbial activity.