Given Data P02-18: FRANKEL LTD. Comparative Income Statements For the Three Months Ended June 30 April May June Sales in units 3,000 3,750 4,500 Sales revenue f 420,000 E 525,000 E 630,000 Cost of goods sold 168,000 210,000 252,000 Gross margin 252,000 315,000 378,000 Selling and administrative expenses: Shipping expense 44,000 50,000 56,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 107,000 125,000 143,000 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total selling and administrative expenses: 272,000 296,000 320,000 Net operating income (loss) .E 20,000 E 19,000 E 58,000FRANKEL LTD. Analysis of Expenses Cost of goods sold Shipping expense Advertising expense Salaries and commissions Insurance expense Depreciation expense Analysis of the mixed expenses: Shipping Salaries & Units Expense Comm. Exp. High level of activity Low level of activity Change - E - E Try again! Try again! Try again! Variable cost element: Change Change Variable in Cost in Activity Rate Shipping expense #DIV/O! #DIV/O! Salaries and commission expense #DIV/O! #DIV/O! Fixed cost element: Shipping Salaries & Expense Comm. Exp. Cost at high level of activity Less variable cost element E - E Try again! Try again! The cost formulas are: Shipping expense Salaries and commission expenseFRANKEL LTD. Income Statement For the Month Ended September 30 Sales in units Sales revenue Variable expenses: Cost of goods sold Shipping expense Salaries & comm. expense Contribution margin Fixed expenses: Shipping expense Advertising expense Salaries and commissions exp. Insurance expense Depreciation expense Net operating income E Try again