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A B C 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. 2 3 Budgeted information for Quarter 1 of
A B C 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. 2 3 Budgeted information for Quarter 1 of Year 3: 4 Sales in units 5 Sales price per unit $ 17,000 48.00 6 D E F 7 After analyzing expenses, the company has determined the following cost patterns. 8 Cost of goods sold 9 Sales commissions $ 29.00 per unit 10 11 12 23 13 14 Administrative salaries Rent expense Depreciation expense 9.50% per dollar of sales sssssssss $ 45,000.00 per quarter $ 27,000.00 per quarter $ 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 18 Quarter 1 19 Quarter2 20 Quarter 3 21 Quarter 4 22 Year 2 Total Shipping Cost Units $ 67,000.00 12,500 $ 94,000.00 21,000 eses $ 89,800.00 13,800 $ 92,600.00 20,000 23 Quarter 1 24 Quarter2 25 Quarter 3 26 Quarter 4 esses 72,500.00 13,700 $ 80,000.00 14,000 $ 84,000.00 14,300 $ 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 33 High level of activity 34 Low level of activity Total Shipping Cost 35 Change in activity 36 37 Variable cost 38 39 Compute the fixed cost portion using the high level of activity. 40 Total cost at high level of activity 41 Less: Variable cost element per unit 42 Total fixed cost 43 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 Units 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 46 67 47 48 Jay Corporation Budgeted Contribution Format Income Statement 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 59 Administrative salaries Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 64 65 66 Sheet1
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