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 has developed the following cost formulas: expenses and Cost Formu Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $30 per unit sold $186,000 per quarter 8% of sales $96,000 per quarter $10,600 per quarter $66,000 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 Units Sold Expense Quarter Year 1 First Second Third Fourth 32,000 $176,000 34,000 $191,000 39,000 $233,000 35,000 $196,000 Year 2 First Second Third Fourth 33,000 $186,000 36,000 $201,000 46,400 $248,000 43,400 $224.000 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