A1 : fie To aid in planning, Jay Corporation is preparing a contribution format income S A B D E F 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 17,000 5 Sales price per unit $ 48.00 6 7 After analyzing expenses, the company has determined the following cost patterns. 8 Cost of goods sold $ 29.00 per unit 9 Sales commissions 9.50% per dollar of sales 10 11 Administrative salaries 45,000.00 per quarter 12 Rent expense $ 27,000.00 per quarter 13 Depreciation expense S 36,000.00 per quarter 14 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 Total Shipping 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 13700 Sheet1 + 1 A A A A Quarter 4 92,600.00 20,000 22 Year 2 23 Quarter 1 72,500.00 13,700 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 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 Units 33 High level of activity 34 Low level of activity 35 Change in activity 36 per unit 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 42 Total fixed cost 43 43 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 46 47 Jay Corporation Budgeted Contribution Format Income Statement For Year 3, Quarter 1 48 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 Administrative salaries 59 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 64 Formatting Table Styles Styles Clipboard Font A3 X A B D E F 1 Given the following information complete a CVP analysis 2 for JPL, Inc.: 3 11,200 units $75 per unit $45 per unit $210,000 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 8 9 Use the data to answer the following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit 13 Variable expenses per unit 14 Contribution margin per unit 15 16 CM ratio 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales 21 Break-even in dollar sales 22 23 3. Compute the margin of safety 24 Margin of safety in dollars per unit per unit per unit units CM ratio Variable expense ratio 2. Compute the break-even point Break-even in unit sales Break-even in dollar sales units 3. Compute the margin of safety Margin of safety in dollars Margin of safety percentage 4. Compute the degree of operating leverage Sales Variable expenses Contribution margin Fixed expenses Net operating income Degree of operating leverage
