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Gallop Corporation prepared the following report for the first quarter of this year: Sales (@ $3,200 per unit) $ 9,600,000 Less: Cost of goods sold

Gallop Corporation prepared the following report for the first quarter of this year:








Sales (@ $3,200 per unit)


$9,600,000
Less: Cost of goods sold



4,115,000
Gross margin



5,485,000
Less:




Selling expenses$1,074,000


Administrative expenses
1,100,000

2,174,000
Income


$3,311,000


Gallop’s controller, Nancy Johnstone, studied the costs in detail, particularly focusing on cost behavior. Her analysis revealed the following:

  • Fixed portion of the cost of goods sold for the quarter amounted to $1,625,000.
  • Of the selling expenses, 20% was variable with respect to the number of units.
  • All of the administrative expenses were fixed.

Required:

1. Express the cost of goods sold and the selling expenses in terms of cost equations. (Round the "Variable cost" to 2 decimal places.)

2. Re-do and prepare the above income statement using a contribution margin approach. (Do not round intermediate calculations.)

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