Bath Bomb Delight Co. manufactures organic bath bombs. The company's income statements for the last two years are given below:

	2020	2021
Units sold	102,000	93,000
Sales	$ 1,014,900	$ 925,350
Cost of goods sold	550,000	501,270
Gross margin	464,900	424,080
Selling expenses	185,000	179,000
Administrative expenses	65,000	65,000
Net income	214,900	180,080

The company has no beginning or ending inventories.

Required:

a. Use the high-low method to determine the cost formula for the selling expenses, which are a mixed cost. When performing calculations round to the nearest cent (i.e. $6.94222 = $6.94) (5 marks)

b. The company expects to sell 108,000 units next year. Prepare the budgeted income statement using the contribution format for this level of activity. No heading required. (7 marks)