1. Analyze a mixed cost using the high-low method. 2. Prepare an income statement for a merchandising company using the contribution format. Paste KUB. High-Low Method Contribution Format Income Statement- Excel ? FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign in X Calibri . 11 % BTU - A Alignment Number Conditional Format as Cell Cells Editing Formatting Table Styles Clipboard Font Styles A1 f. Jay Corporation has decided to prepare contribution income statements for B D E Jay Corporation has decided to prepare contribution Income statements for internal planning, 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. Variable Cost of Goods Sold (per unit) 29.00 9 Sales Commissions (per dollar of sales) 9.50% 10 11 Fixed Manufacturing Overhead (per quarter) $ 45,000.00 - 1 2 8 11 Fixed Manufacturing Overhead (per quarter) $ 45,000.00 12 Administrative Salaries (per quarter) $ 27,000.00 13 Depreciation Expense (per quarter) 36,000.00 14 15 Shipping Cost has been determined to be mixed with the following costs for the past two years: 16 17 Year 1 Total Cost Units 18 Quarter 1 $ 67,000.00 12,500 19 Quarter 2 $ 94,000.00 21,000 20 Quarter 3 $ 89,800.00 13,800 21 Quarter 4 $ 92,600.00 20,000 22 Year 2 13,700 14,000 14,300 22,500 23 Quarter 1 $ 72,500.00 24 Quarter2 $ 80,000.00 25 Quarter 3 $ 84,000.00 26 Quarter 4 $ 100,000.00 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 Units E A 31 32 Total Shipping Cost Units 33 High level of activity 34 Low level of activity 35 Change in activity 36 37 Variable shipping cost per unit por unit 38 39 Fixed shipping cost: (Note: please use the highest activity point to compute the total fixed cost.) 40 Total shipping cost at high level of activity 41 Less: Variable shipping cost at high level of activity 42 Total fixed shipping cost 43 44 2. Prepare a contribution margin income statement for Quarter 1 of Year 3. 45 46 Jay Corporation 47 Budgeted 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 (Variable portion Sheet1 A B C D E 46 47 48 49 Jay Corporation Budgeted Income Statement For Year 3, Quarter 1 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense (Variable portion) 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: 58 Fixed Manufacturing Overhead 59 Administrative Salaries 60 Shipping expense (Fixed portion) 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 64 65 66 67
