1. Analyze a mixed cost using a scattergraph plot and the high-low method. 2. Prepare income statements for a merchandising company using the traditional and contribution formats. FILE HOME INSERT Calibri Paste High-Low Method; Contribution Format Income Statement - Excel PAGE LAYOUT 11 FORMULAS DATA % REVIEW VIEW Sign In Clipboard BIU A1 A Font fx Alignment Number Conditional Format as Cell Cells Editing Formatting Table Styles Styles To aid in planning, Jay Corporation is preparing a contribution format income B C 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. D E F 2 12345 3 Budgeted information for Quarter 1 of Year 3: 4 Sales in units Sales price per unit $ 17,000 48.00 6 7 After analyzing expenses, the company has determined the following cost patterns. 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. 2 3 Budgeted information for Quarter 1 of Year 3: 4 Sales in units 569 Sales price per unit $ 17,000 48.00 7 After analyzing expenses, the company has determined the following cost patterns. $ 29.00 per unit 8 Cost of goods sold 9 Sales commissions 10 11 Administrative salaries 12 Rent expense 13 Depreciation expense 14 9.50% per dollar of sales sss $ 45,000.00 per quarter $ 27,000.00 per quarter $ 36,000.00 per quarter 15 Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the last eight quarters are: 16 17 Year 1 Total Shipping Cost Units 18 Quarter 1 $ 67,000.00 12,500 19 Quarter2 $ 94,000.00 21,000 20 Quarter 3 $ 89,800.00 13,800 21 Quarter 4 $ 92,600.00 20,000 22 22 Year 2 23 Quarter 1 $ 72,500.00 13,700 24 Quarter2 $ 80,000.00 14,000 25 Quarter 3 $ 84,000.00 14,300 26 Quarter 4 $ 100,000.00 22,500 27 28 Use the data to answer the following. 29 30 1. Using the high-low method, determine a cost formula for shipping expenses. 31 32 Total Shipping Cost 33 High level of activity 34 Low level of activity 35 Change in activity 36 37 Variable cost 38 39 Compute the fixed cost portion using the high level of activity. 40 Total cost at high level of activity 41 Less: Variable cost element Sheet1 per unit Units 41 Less: Variable cost element 42 Total fixed cost 43 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 46 47 48 49 Jay Corporation Budgeted Contribution Format Income Statement For Year 3, Quarter 1 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: Administrative salaries 58 59 Rent expense 60 Shipping expense Sheet1 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: Administrative salaries 58 59 Rent expense 60 61 Shipping expense Depreciation expense 62 Total fixed expenses 63 Net operating income 64