Frankel 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:

(Note: Frankel Ltd.s income statement has been recast in the functional format common in the United States. The British currency is the pound, denoted by .)

1. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense.

2. Redo the companys income statement at the 4,500-unit level of activity using the contribution format