Kanban Company estimated sales of 40,000 units at $6 each. Budgeted cost of goods sold per unit includes $1.20 of direct materials, six minutes of direct labor time at $15 per hour, and unit overhead cost of $1.30. Kanban pays a sales commission of 10% of sales revenue. Fixed selling and administrative expenses are budgeted at $25,000. Prepare a statement of operating income. g

In the short-run, marginal costs are equal to the change in variable costs as output changes. ( mc = change in variable cost / change in quantity) assume that capital is fixed in the short-run. (a) start with the equation for marginal cost and derive an equation that relates marginal cost of production to the cost and productivity of labor. (b) draw a standard looking short-run marginal cost curve and use the equation you derived to explain its shape.