I am having trouble with the income statement part. Thanks! ### General Instructions:You are considering opening up a coffee shop. It will be a straightforward place that sells various brews of coffee. But the first thing you want to understand is what the projection of net income will be under different scenarios.To do the upfront analysis, you have accumulated data on all the costs related to running a coffee shop. These costs and sales revenue, noted below, represent all the costs you can think of based on your vision of the coffee shop.You are the business owner, but you won't take a salary. Your earnings will be based on how much Net Income the coffee shop makes.### Your Assignment:1. **Classify each cost as fixed or variable (see below).**2. **Calculate the annual cost for cost description (see below).**3. **Using the cost and sales data below, prepare Income Statements (to the right) based on the criterion provided.****Note:** All yellow cells require data to be input.(Start below) ### Business Cost Analysis and Break-Even CalculationThis educational page provides a detailed template for calculating business costs and determining the break-even point for a coffee shop. #### General Business CostsThe table below itemizes monthly, quarterly, and annual costs associated with running a coffee shop, categorized into fixed and variable expenses:**General Business Costs:**| **Cost Item** | **Payment Frequency** | **Cost Type** | **Annual Cost** ||-------------------------------------------------|-----------------------|---------------|-----------------|| Rent | Monthly | Fixed | $6,000 || Utilities | Monthly | Fixed | $1,800 || Insurance | Annually | Fixed | $800 || Water | Quarterly | Fixed | $600 || Coffee Making Equipment - Depreciation | Annually | Fixed | $2,400 || Laptop and Credit Card Scanner - Depreciation | Annually | Fixed | $1,200 || Table and Chair Rental | Monthly | Fixed | $1,200 || Barista Salary | Annually | Fixed | $25,000 || Other Miscellaneous Costs | Monthly | Fixed | $1,800 |**Total Fixed Costs: $40,800**#### Ingredients and Variable Costs**Cost Per Cup of Coffee:**| **Ingredient** | **Unit Cost** | **Cost Type** ||---------------------------|---------------|---------------|| Coffee Grounds | $0.75 | Variable || Sugar/Cream/Flavoring | $0.05 | Variable || Paper Cup and Top | $0.12 | Variable || Heat Protection Sleeve | $0.05 | Variable || Plastic Stirrer | $0.03 | Variable |**Total Variable Cost Per Cup: $1.00**#### Sales Price of CoffeeThe selling price per cup of coffee is set at $4.00.### Income StatementThe template includes fields to compute total sales revenue, variable costs, contribution margin, fixed costs, and net income across different scenarios:**Break-Even Point and Income Statement:**| **Income Statement** | **Break-Even Point** | **Base Scenario** | **Scenario 1** | **Scenario 2** | **

ANS 1 & 2 Fixed costs are the cost associated with your business product or service must be…

Answered: ut the first thing you want to understa…

ut the first thing you want to understa enarios. front analysis you have accumulated and sales revenue, noted below, repre

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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