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	$34 per unit sold
Advertising expense	$190,000 per quarter
Sales commissions	7% of sales
Shipping expense	?
Administrative salaries	$100,000 per quarter
Insurance expense	$11,000 per quarter
Depreciation expense	$70,000 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:

Quarter	Units Sold	Shipping Expense
Year 1:
First	36,000	$	180,000
Second	38,000	$	195,000
Third	43,000	$	237,000
Fourth	39,000	$	200,000
Year 2:
First	37,000	$	190,000
Second	40,000	$	205,000
Third	54,000	$	252,000
Fourth	51,000	$	228,000

Milden Companys 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.