income statement

sales in units: july 4500, august 5000, september 6000

sales revenue: july $675,000, august $750,000, sept. $900,000

Cost of goods sold: july 275,000, august 300,000, sept. 350,000

gross margin: july 400,000, aug. 450,000, sept. 550,000

Operating expenses:

Advertising expense: july 11,000, aug.11,000, sept. 11,000

shipping expense: july 27,000, aug. 30,000, sept 36,000

salaries and commissions: july 127,500, aug. 135,000, sept.150,000

legal expense: july 7000, aug. 7000, sept 7000

Depreciation expense: july 10,000, aug. 10,000, sept. 10,000

Total op expenses: july 182,000, aug. 193,000, sept. 214,000

Operating income: july $217,000, aug. $257,000, sept. $336,000

1.) identify each of the company's individual expenses as either a variable, fixed or mixed cost.

2.) using the high low method, separate each of the individual mixed cost into the variable and fixed elements. state the cost equation for each individual mixed cost.

3.) they expect to sell 6,500 units in october. prepare an absorption income statement for october.

4.) Prepare a contribution margin income statement based on october sales of 6,500 unit. do not combine expenses but show each expense separately in the appropriate category.

5.) Calculate the contribution margin per unit and the variable cost ratio.

6.) how many units would need to be sold to generate $350,000 in target income?

7.) give one example of how they could increase projected income without increasing total sales revenue.

8.) they are considering a multimedia advertising campaign that should increase sales by $50,000 per month. the ad campaign will cost an additional $1500 per month and will be considered a fixed cost. How will the ad campaign affect production cost? How will the increase in fixed cost affect the break-even point?