Lesson 13 Managerial Accounting I: Concepts and Principles Exercise 1. Sunny Brockman has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Sunny will rent a garage for $1000 per month for production purposes. Utilities will cost $200 per month. Sunny has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $1000. Sunny will rent production equipment at a monthly cost of $4000. He estimates the material cost per unit will be $25, and the labour cost will be $15. He will hire workers and spend his time promoting the product. To do this, he will quit his job, which pays $10000 per month. Advertising and promotion will cost $3000 per month. Required: Complete the chart below by placing an "(" under each heading that helps to identify the cost involved. You can place an “(” under more than one heading for a single cost: for example, a cost may be a sunk cost, an overhead cost, and a product cost; you would place an "(" under each of these headings opposite the cost. Opportu- nity cost Sunk cost Variable cost Fixed cost Manu- facturing overhead Product cost Selling- cost  Garage rent         Utilities         Cost of the industrial design course         Equipment rented         Material cost         Labour cost         Present salary         Advertising          2. The following information summarizes the XYZ company's cost structure: Variable cost per unit $2.60  Fixed cost per unit $9.00  Total cost per unit $11.60  Units produced and sold 96000  Assume that all of the activity levels mentioned in this problem are within the relevant range Required: Prepare a schedule showing predictions for the following items at the 30,000 unit level of activity: Total variable cost. Total fixed cost. Variable cost per unit. Fixed cost per unit.