Question

Scooby's T-shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities...

  1. Scooby'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

   At 8,000    At 10,000

T-shirt T-shirt

T-shirt cost    $48,000    60,000

Rent Cost    $3,000 $3,600

Utillities Cost    $6,800 $ 8,300

Assume that all the activity levels mentioned in this problem are within the relevant range.

Required: a. Estimate Scooby's total variable cost if 9,000 T-shirts are sold next month.

b. Estimate Scooby’s contribution margin if 10,000 T-shirts are sold.

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