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Martin Office Supply Company has the following information available regarding costs and revenues for two recent months. Selling price is $20. March April Sales revenue

Martin Office Supply Company has the following information available regarding costs and revenues for two recent months. Selling price is $20.

March April

Sales revenue $60,000 $100,000

Cost of goods sold -36,000 - 60,000

Gross profit $24,000 $ 40,000

Less other expenses:

Advertising $ 600 $ 600

Utilities 4,200 5,600

Salaries and commissions 3,200 4,000

Supplies (bags, cleaning supplies etc.) 320 400

Depreciation 2,300 2,300

Administrative costs 1,900 1,900

Total -12,520 -14,800

Net income $11,480 $25,200

Required:

a. Identify each of the company's expenses (including cost of goods sold) as being either variable, fixed, or mixed.

b. By use of the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense.

c. What is the total cost equation?

d. Estimate total cost if sales = $75,000.

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