CHAPTER 2 HANDOUT - COST BEHAVIORS Tompkins Travel Agency is a local travel agency that provides travel and tourism services. The agency sells several different vacation packages that are inclusive of transportation, accommodation, and attraction costs that have identical purchase costs and selling prices. The agency compensates employees with a combination of salary and commission. Oscar, the CFO, would like your help analyzing the company's expenses and creating a formula to forecast future costs. THIS HANDOUT CONSISTS OF REQUIREMENTS A, B AND C Requirement A: Identify the cost behavior of the following costs that Tomokins Travel Agency incurs. Requirement B: Using the high-low method, write a cost equation for Tompkins Travel Agency based on last year's activity. SHOW YOUR WORK BELOW COST EQUATION 10 5-45 PAGE 182 Requirement C: Assuming each vacation package is sold for $1,500, prepare a contribution margin income statement for the month of June using your cost equation from Requirement B (hint: we sold 90 units in dunal