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		2,000				5,500			6,100
Sales revenue		300,000				825,000			915,000
Cost of goods sold		142,000				390,500			433,100
Gross margin		158,000				434,500			481,900
Selling and administrative expenses:
Shipping expense		51,800				118,300			129,700
Advertising expense		46,000				46,000			46,000
Salaries and commissions		94,000				220,000			241,600
Insurance expense		6,200				6,200			6,200
Depreciation expense		41,900				41,900			41,900
Total selling and administrative expenses		239,900				432,400			465,400
Net operating income (loss)		(81,900)				2,100			16,500

(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 companys expenses (including cost of goods sold) as either variable, fixed, or mixed.

Expenses	Classification
Cost of goods sold	Variable
Shipping expense	Mixed
Advertising expense	Fixed
Salaries and commissions	Mixed
Insurance expense	Fixed
Depreciation expense	Fixed

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	Formula
Shipping expense	19	per unit	13,800	Y =	13,800	+	19	X
Salaries and commission expense		per unit		Y =		+		X

3.

Redo the companys income statement at the 6,100-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

During the month of April, direct labor cost totaled $13,360 and direct labor cost was 40% of prime cost. If total manufacturing costs during April were $74,200, the manufacturing overhead was:

$52,600

$33,400

$40,800

$11,800

At an activity level of 9,100 machine-hours in a month, Curt Corporation's total variable production engineering cost is $803,530 and its total fixed production engineering cost is $161,280. What would be the total production engineering cost per hour, both fixed and variable, at an activity level of 9,600 machine-hours in a month? Assume that this level of activity is within the relevant range. (Do not round intermediate calculations.)

$104.21

$104.75

$105.10

$105.28

A soft drink bottler incurred the following factory utility cost: $3,736 for 1,200 cases bottled and $3,812 for 1,700 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:

$3.11

$0.15

$2.24

$2.20