Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: Cost Cost Formula Cost of good sold $26 per unit sold Advertising expense $183,000 per quarter Sales commissions 7% of sales Shipping expense ? Administrative salaries $93,000 per quarter Insurance expense $10,300 per quarter Depreciation expense $63,000 per quarter Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow: Shipping Quarter Units Sold Expense Year 1: First 29,000 $ 173,000 Second 31,000 $ 188,000 Third 36,000 $ 230,000 Fourth 32,000 $ 193,000 Year 2 First 30,000 $183,000 Second 33,000 $ 198,000 Third 47,000 $ 245,000 Fourth 44,000 $221,000 Milden Company's president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. Required: 1. Using the high-low method, estimate a cost formula for shipping expense based on the data for the last eight quarters above Shipping Expense Units Sold High activity level Low activity level Change per unit Variable cost per unit Fixed cost element Y= + X 2. In the first quarter of Year 3, the company plans to sell 35,000 units at a selling price of $56 per unit. Prepare a contribution format income statement for the quarter. (Do not round your intermediate calculations.) Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Sales Variable expenses Total variable expenses Contribution margin Fixed expenses Total fixed expenses