You start a lemonade stand. He estimates that he will sell 1,000 glasses of lemonade over the next year. Each glass of lemonade sells for $3. Each glass comes with the following costs: Lemons, cups and sugar $.90 Labor .20 Sales commission .30 $1.40 You also have the following costs for the year: Blender depreciation $500 Equipment maintenance $500 Booth rent of lemonade $500 Counter $500 No other costs were incurred. Because he only sells fresh lemonade, he doesn't keep any inventory of anything. 

Required: 

1. What are your budgeted (estimated) sales for the year? $2,000 

2. What are your budgeted production costs for the year? Break this amount down among the major production cost categories (direct materials, direct labor, and overhead).

 3. What are the other budgeted costs (not related to production)?

 4. What are your estimated total costs for the year?

 5. What are your budgeted earnings for the year? 

6. Of the above costs, are there any that you would expect to incur each time we make a glass? How much are these per cup? How much of these would we budget for next year in total? 

7. Of the above costs, are there any that you would expect us NOT to incur more each time we make a glass? How much of these would we expect IN TOTAL for next year? 

8. What is the total for the year for numbers 6 and 7 above? How does this compare to #4? 

9. How many cups must he sell to "break even" for the season? 

10. How many glasses must he sell if he wants to make a profit of $1,000 for the season? What are your estimated total costs for the year?

Answer rating: 100% (QA)

2 Budgeted production costs for the year Direct materials 1000 glasses x 090glass 900 Direct labor 1... View the full answer