Arnall Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The companys 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				May			June
Sales in units		3,000				6,000			7,700
Sales revenue		510,000				1,020,000			1,309,000
Cost of goods sold		234,000				468,000			600,600
Gross margin		276,000				552,000			708,400
Selling and administrative expenses:
Shipping expense		49,000				88,000			110,100
Advertising expense		48,000				48,000			48,000
Salaries and commissions		152,000				278,000			349,400
Insurance expense		6,000				6,000			6,000
Depreciation expense		30,800				30,800			30,800
Total selling and administrative expenses		285,800				450,800			544,300
Net operating income (loss)		(9,800)				101,200			164,100

(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:

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.)

3.	Redo the companys income statement at the 7,700-unit level of activity using the contribution format.