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 1,800 3,200 4,800 Sales revenue 313,200 556,800 835,200 Cost of goods sold 120,600 214,400 321,600 Gross margin 192,600 342,400 513,600 Selling and administrative expenses: Shipping expense 41,300 58,100 77,300 Advertising expense 70,000 70,000 70,000 Salaries and commissions 104,400 157,600 218,400 Insurance expense 9,900 9,900 9,900 Depreciation expense 42,300 42,300 42,300 Total selling and administrative expenses 267,900 337,900 417,900 Net operating income (loss) (75,300) 4,500 95,700 (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 .) 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 per unit Y = + X Salaries and commission expense per unit Y = + X Redo the companys income statement at the 4,800-unit level of activity using the contribution format.

Arnall Ltd.
Income Statement
For the Month Ended June 30
Variable expenses:
Total variable expenses		0
		0
Fixed expenses:
Total fixed expenses		0
		0