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

Sales (2,600 units @ $2,800 per unit)			$	7,280,000
Less: Cost of goods sold				3,242,000
Gross margin				4,038,000
Less:
Selling expenses	$	1,049,000
Administrative expenses		1,050,000		2,099,000
Income			$	1,939,000

Gallops controller, Nancy Johnstone, studied the costs in detail, particularly focusing on cost behaviour.

Her analysis revealed the following:
	Sixty-five percent of the cost of goods sold was variable with respect to the number of units.
	Of the selling expenses, $750,000 was fixed; the remaining 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.	Redo the above income statement using a contribution margin approach.

prepared the following report for the first quarter of this year Sales (2,600 units @ $2,800 per unit) Less: Cost of goods sold $7,280,000 3,242,000 Gross margin Less 4,038,000 Selling expenses Administrative expenses 1,049,000 1,050,000 2,099,000 Income $1,939,000 Gallop's controller, Nancy Johnstone, studied the costs in detail, particularly focusing on cost behaviour. Her analysis revealed the following: Sixty-five percent of the cost of goods sold was variable with respect to the number of units. Of the selling expenses, $750,000 was fixed, the remaining was variable with respect to the number All of the administrative expenses were fixed. of units. 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.) Cost of goods sold Y $1,134,700 per quarter Selling expenses Y-$ 750,000 per quarter+ 2,800.00 X