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 $22 per unit sold Advertising expense $172,000 per quarter Sales commissions 5% of sales Shipping expense ? Administrative salaries $82,000 per quarter Insurance expense $9,200 per quarter Depreciation expense $52,000 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 Year 2: First Second Third 18,000 20,000 25,000 21,000 $ 162,000 $ 177,000 $ 219,000 $ 182,000 19,000 22,000 30,000 $ 172,000 $ 187,000 $234,000 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 $22 per unit sold Advertising expense $172,000 per quarter Sales commissions 5% of sales Shipping expense ? Administrative salaries $82,000 per quarter Insurance expense $9,200 per quarter Depreciation expense $52,000 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 Year 2: First Second Third 18,000 20,000 25,000 21,000 $ 162,000 $ 177,000 $ 219,000 $ 182,000 19,000 22,000 30,000 $ 172,000 $ 187,000 $234,000 For the First Quarter, Year 3 $ 1,300,000 $ Variable expenses: Cost of goods sold Sales commissions Shipping expense 550,000 65,000 150,000 765,000 535,000 Total variable expenses Contribution margin Fixed expenses: Advertising expense Shipping expense Administrative salaries Insurance expense Depreciation expense 172,000 54,000 82,000 9,200 52,000 Total fixed expenses 369,200 $ 165,800 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 $22 per unit sold Advertising expense $172,000 per quarter Sales commissions 5% of sales Shipping expense ? Administrative salaries $82,000 per quarter Insurance expense $9,200 per quarter Depreciation expense $52,000 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 Year 2: First Second Third 18,000 20,000 25,000 21,000 $ 162,000 $ 177,000 $ 219,000 $ 182,000 19,000 22,000 30,000 $ 172,000 $ 187,000 $234,000 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 $22 per unit sold Advertising expense $172,000 per quarter Sales commissions 5% of sales Shipping expense ? Administrative salaries $82,000 per quarter Insurance expense $9,200 per quarter Depreciation expense $52,000 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 Year 2: First Second Third 18,000 20,000 25,000 21,000 $ 162,000 $ 177,000 $ 219,000 $ 182,000 19,000 22,000 30,000 $ 172,000 $ 187,000 $234,000 For the First Quarter, Year 3 $ 1,300,000 $ Variable expenses: Cost of goods sold Sales commissions Shipping expense 550,000 65,000 150,000 765,000 535,000 Total variable expenses Contribution margin Fixed expenses: Advertising expense Shipping expense Administrative salaries Insurance expense Depreciation expense 172,000 54,000 82,000 9,200 52,000 Total fixed expenses 369,200 $ 165,800