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2.CEC Corporation distributes paper cups. CEC owns some shipping equipment whose costs are sometimes lumped in with Shipping Expense. Below is a comparative income statement

2.CEC Corporation distributes paper cups. CEC owns some shipping equipment whose costs are sometimes lumped in
with Shipping Expense. Below is a comparative income statement listing the last three months activity.
CEC Corportion
Comparative Income Statement
Three Months Ending March 31, 2013
January February March
Sales in Units 6,000 8,000 10,000
Sales Revenue $690,000 $920,000 $1,150,000
Cost of Goods Sold(100% Varible) $414,000 $552,000 $690,000
Gross Margin $276,000 $368,000 $460,000
Selling & Administrative Expenses:
Shipping Expense $34,000 $42,000 $49,000
Advertising Expense $65,000 $65,000 $65,000
Salaries & Commission Expense $110,000 $125,000 $135,000
Insurance Expense $12,000 $12,000 $12,000
Depreciation Expense $5,000 $5,000 $5,000
Total Selling & Administrative Expense $226,000 $249,000 $266,000
Net Operating Income $50,000 $119,000 $194,000
Required:
1. Using the high-low method, separate the mixed expenses (Shipping Expense and Salaries and Commission Expense)
into variable and fixed components
2. Redo the company's income statement at the 10,000 unit level of activity using the contribution approach format

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