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2. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense. (Enter mixed expenses
2. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense. (Enter mixed expenses in the order of company expenses provided under question.) Variable Cost Fixed Cost per unit Y = per unity= F Formula + - X xl 3. Redo the company's income statement at the 7,300-unit level of activity using the contribution format. Arnall Ltd. Income Statement For the Month Ended June 30 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses in British pounds) for the last three months are given below: Arnall Ltd. Comparative Income Statements For the Three Months Ended June 30 April 2,600 May 4,000 June 7,300 Sales in units Sales revenue Cost of goods sold 520,000 213,200 800,000 328,000 1,460,000 598,600 Gross margin 306,800 472,000 861,400 Selling and administrative expenses: Shipping expense Advertising expense Salaries and commissions Insurance expense Depreciation expense 39,900 57,000 143,600 7,500 47,800 55,300 57,000 208,000 7,500 47,800 91,600 57,000 359,800 7,500 47,800 Total selling and administrative expenses 295,800 375,600 563,700 Net operating income (loss) 11,000 96,400 297,700 (Note: Arnall Ltd.'s income statement has been recast in the functional format common in the United States. The British currency is the pound, denoted by .) Required: 1. Identify each of the company's expenses (including cost of goods sold) as either variable, fixed, or mixed. Classification Expenses Cost of goods sold Shipping expense Advertising expense Salaries and commissions Insurance expense Depreciation expense
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