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