B 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. 2 3 Budgeted information for Quarter 1 of Year 3: Sales in units 17,000 5 Sales price per unit 48.00 4 6 9 7 After analyzing expenses, the company has determined the following cost patterns. 8 Cost of goods sold 29.00 per unit Sales commissions 9.50% per dollar of sales 10 11 Administrative salaries 45,000.00 per quarter Rent expense 27,000.00 per quarter 13 Depreciation expense 36,000.00 per quarter 14 12 Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the last eight quarters are: Total Shipping Cost $ 67,000.00 $ 94,000.00 $ 89,800.00 $ 92,600.00 Units 12,500 21,000 13,800 20,000 Year 1 3 Quarter 1 9 Quarter 2 0 Quarter 3 1 Quarter 4 -2 Year 2 23 Quarter 1 24 Quarter 2 25 Quarter 3 26 Quarter 4 $ $ $ $ 72,500.00 80,000.00 84,000.00 100,000.00 13,700 14,000 14,300 22,500 1. Using the high-low method, determine a cost formula for shipping expenses. 1 2 Total Shipping Cost Units 3 High level of activity 4 Low level of activity 5 Change in activity 36 37 Variable cost per unit 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