Question:

• Complete Phase I: Req #4) Write out the yearly cost formula in a Y = a + bX format. Be sure to include both manufacturing costs and nonmanufacturing costs in the cost formula.
• Complete Phase I: Req #5) Assume that you make and sell 7,800 t-shirts in the first year. Use the cost formula to calculate your first year's total cost. If you sell these t-shirts at $15 each, how much would your net profit be in the first year?

Business Costs Product or Period Cost Variable or Fixed Cost Per Unit Cost (Variable) Annual Cost (Fixed) Artist - contract Product Fixed $10,000 $300 x 12 designs Artist - design fee Product Fixed $3,600 One-time startup costs - not included in annual expenses Computer/Printer Product Fixed $5,400 Computer/Printer Period Fixed $600 One-time startup costs - not included in annual expenses $5400 less residual value ($0) / 3 yrs $1800 $600 less residual value ($0) / 3 years = $200 Depreciation - Computer/Printer Product Fixed $1,800 Depreciation - Computer/Printer Period Fixed $200 $4500 less residual value ($0) / 3 years = $1500 Depreciation - Heat Press Machine Product Fixed $1,500 -- One-time startup costs - not included in annual expenses Heat Press Machine Product Fixed $4,500 Liability Insurance Period Fixed $3,600 $2250 per month x 12 mos Mall Rent 90% Product Fixed $27,000 $250 per month x 12 mos Mall Rent 10% Period Fixed $3,000 Owners (shared) Period (S/A) Fixed $12,000 $1000 per quarter x 4 qtrs $125 per month x 12 mos Parties Period Fixed $4,000 Storage Unit Product Fixed $1,500 $50/500 prints = $0.10/print... 1 print per shirt Inkjet Cartridges Product Variable $0.10 1 flyer print = $0.10, print one every 5 shirts, so $0.10/5 = $0.02 Inkjet Cartridges Period Variable $0.02 1 flyer paper = $0.10, print one every 5 shirts, so $0.10/5 = $0.02 Laser Paper Period Variable $0.02 $8.00/10 shirts = $0.80 per shirt (DL $8/hr, make 10 shirts per hour) Student Workers (3) Product (Transfer) Variable $0.80 $8.00/20 shirts = $0.40 per shirt (DL $8/hr, fold 20 shirts per hour) Student Workers (3) Period (Folding/Wrapping) Variable $0.40 T-shirts Product Variable $3.75 $400/1000 sheets = $0.40/sheet...1 transfer paper per shirt Transfer Paper Product Variable $0.40 Wrapping Paper/Box Period Variable $0.20 Fixed (a) Variable (b) $68,200 $5.69 (Artist contract + Artist design fee + Printer Depreciation + Heat Press Depreciation + Liability Insurance + Mall Rent (both) + Owners token salary + Parties Storage Unit) (Inkjet cartridges (both) + Laser Paper + Workers (both) + T-shirts +Transfer Paper + Wrapping Paper/Box) Business Costs Product or Period Cost Variable or Fixed Cost Per Unit Cost (Variable) Annual Cost (Fixed) Artist - contract Product Fixed $10,000 $300 x 12 designs Artist - design fee Product Fixed $3,600 One-time startup costs - not included in annual expenses Computer/Printer Product Fixed $5,400 Computer/Printer Period Fixed $600 One-time startup costs - not included in annual expenses $5400 less residual value ($0) / 3 yrs $1800 $600 less residual value ($0) / 3 years = $200 Depreciation - Computer/Printer Product Fixed $1,800 Depreciation - Computer/Printer Period Fixed $200 $4500 less residual value ($0) / 3 years = $1500 Depreciation - Heat Press Machine Product Fixed $1,500 -- One-time startup costs - not included in annual expenses Heat Press Machine Product Fixed $4,500 Liability Insurance Period Fixed $3,600 $2250 per month x 12 mos Mall Rent 90% Product Fixed $27,000 $250 per month x 12 mos Mall Rent 10% Period Fixed $3,000 Owners (shared) Period (S/A) Fixed $12,000 $1000 per quarter x 4 qtrs $125 per month x 12 mos Parties Period Fixed $4,000 Storage Unit Product Fixed $1,500 $50/500 prints = $0.10/print... 1 print per shirt Inkjet Cartridges Product Variable $0.10 1 flyer print = $0.10, print one every 5 shirts, so $0.10/5 = $0.02 Inkjet Cartridges Period Variable $0.02 1 flyer paper = $0.10, print one every 5 shirts, so $0.10/5 = $0.02 Laser Paper Period Variable $0.02 $8.00/10 shirts = $0.80 per shirt (DL $8/hr, make 10 shirts per hour) Student Workers (3) Product (Transfer) Variable $0.80 $8.00/20 shirts = $0.40 per shirt (DL $8/hr, fold 20 shirts per hour) Student Workers (3) Period (Folding/Wrapping) Variable $0.40 T-shirts Product Variable $3.75 $400/1000 sheets = $0.40/sheet...1 transfer paper per shirt Transfer Paper Product Variable $0.40 Wrapping Paper/Box Period Variable $0.20 Fixed (a) Variable (b) $68,200 $5.69 (Artist contract + Artist design fee + Printer Depreciation + Heat Press Depreciation + Liability Insurance + Mall Rent (both) + Owners token salary + Parties Storage Unit) (Inkjet cartridges (both) + Laser Paper + Workers (both) + T-shirts +Transfer Paper + Wrapping Paper/Box)