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. x 5 High-Low Method; Contribution Format Income Statement - Excel ? FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 - A A % Paste BIU- Alignment Number Cells Editing Conditional Format as Cell Formatting Table Styles Styles Clipboard Font E33 V X fx A B D E TI F $ 2 3 Budgeted information for Quarter 1 of Year 3: 4 Sales in units 17,000 5 Sales price per unit 48.00 6 7 After analyzing expenses, the company has determined the following cost patterns. 8 Cost of goods sold $ 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 13 14 Depreciation expense $ 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 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 Units 33 High level of activity 34 Low level of activity 35 Change in activitu Sheet1 A A C READY + 100% Attemptisk | per unit 31 32 Total Shipping Cost Units 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 activ 40 Total cost at high level of activity 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 Jay Corporation 47 Budgeted Contribution Format Income Statement 48 For Year 3, Quarter 1 49 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense Sheet1 D E F A B 46 Jay Corporation 47 Budgeted Contribution Format Income Statement 48 For Year 3, Quarter 1 49 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: 58 Administrative salaries 59 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 64 65 66 67 Sheet1 READY BRA B + 100% Attemptis
