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. High-Low Method: Contribution Format Income Stateme... PAGE FORMULAS DATA REVIEW VIEW FILE HOME INSERT Calibri 11 ' ' Paste BIU Clipboard Font A1 % AlignmeNumbeConditionFormat Cell Cells Formattir as Styles Styles Sign In fx To aid in planning, Jay Corporation is preparing a contribution format B D E F G 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 5 Sales price per unit $ 17,000 48.00 6 8 Cost of goods sold 7 After analyzing expenses, the company has determined the following cost patterns. $ 29.00 per unit 9 Sales commissions 9.50% per dollar of sales 10 11 Administrative salaries $ 45,000.00 per quarter 12 Rent expense $ 27,000.00 per quarter 13 Depreciation expense $ 36,000.00 per quarter 14 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 Year 2 23 Quarter 1 $ 72,500.00 13,700 Sheet1 READY Attempt(s) + 90% Hint 22 Year 2 A B C 23 Quarter 1 24 Quarter2 SAS $ 72,500.00 13,700 $ 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 33 High level of activity 34 Low level of activity 35 Change in activity 36 37 Variable cost 38 Total Shipping Cost Units 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 42 Total fixed cost 43 per unit 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 E F G 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 54 Sales commissions Shipping expense 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: Administrative salaries 58 59 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 64 65 1. Compute the CM ratio and variable expense ratio. 2. Compute the break-even point. 3. Compute the margin of safety. 4. Compute the degree of operating leverage. FILE HOME INSERT PAGE Calibri 11 ' ' Paste BIU Clipboard Font D3 fx A B CVP Analysis - Excel FORMULAS DATA REVIEW VIEW % AlignmeNumbeCondition Format Cell Cells Formattir as Styles Styles D E F 11,200 units $75 per unit $45 per unit 3 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 8 9 Use the data to answer the following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit 13 Variable expenses per unit 14 Contribution margin per unit 15 16 CM ratio 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales 21 Break-even in dollar sales 22 23 3. Compute the margin of safety 24 Margin of safety in dollars 25 Margin of safety percentage 26 27 4. Compute the degree of operating leverage 28 Sales 29 Variable expenses 30 Contribution margin 31 Fixed expenses 32 Net operating income 33 34 Degree of operating leverage $210,000 per unit per unit per unit units READY Attempt(s) Sheet1 + Sign In N + 10% Hint