1. Analyze a mixed cost using the high-low method.

2. Prepare an income statement for a merchandising company using the contribution format.

D E FA 1 A B Jay Corporation has decided to prepare contribution income statements for internal planning. 2 3 Budgeted information for Quarter 1 of Year 3: Sales in units Sales price per unit 17.000 48.00 $ 4 5 6 7 8 9 10 11 12 After analyzing expenses, the company has determined the following cost patterns. Variable Cost of Goods Sold (per unit) $ Sales Commissions (per dollar of sales) 9.50% 29.00 Fixed Manufacturing Overhead (per quarter) Administrative Salaries (per quarter) 13 Depreciation Expense (per quarter) $ $ $ 45,000.00 27.000.00 36,000.00 17 Year 1 15 Shipping Cost has been determined to be mixed with the following costs for the past two years: 16 Total 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 Quarter 2 $ 80.000.00 14,000 Sheet1 D 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 Jse the data to answer the following. 29 30 . Using the high-low method, determine a cost formula for shipping expenses. 31 32 Total Shipping Cost Units 33 ligh level of activity 34 .ow level of activity 35 Change in activity 36 37 fariable shipping cost per unit 38 39 'ixed shipping cost: (Note: please use the highest activity point to compute the total fixed cost.) 40 Total shipping cost at high level of activity Less: Variable shipping cost at high level of activity 42 Total fixed shipping cost per unit 41 44. Prepare a contribution margin income statement for Quarter 1 of Year 3. 45 46 Jay Corporation 47 Budgeted Income Statement Sheet1 B D E L 45 46 47 48 49 Jay Corporation Budgeted Income Statement For Year 3, Quarter 1 50 tales 51 lariable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense (Variable portion) 55 Total variable expenses 56 Contribution margin 57 'ixed expenses: 58 Fixed Manufacturing Overhead 59 Administrative Salaries 60 Shipping expense (Fixed portion) 61 Depreciation expense 62 otal fixed expenses 63 let operating income 64 65 66 67 Sheet1