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 Fourth 18,000 20,000 25,000 21,000 $ 162,000 $ 177,000 $ 219,000 $ 182,000 19,000 22,000 30,000 27,000 $ 172,000 $ 187,000 $234,000 $ 210,000 Milden Company's president would like a cost formula derived for shipping expense on that a hudneted contribution format income statement can ho nronared for the next 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 0 $ 0 per unit Variable cost per unit Fixed cost element Y= + X 2. In the first quarter of Year 3, the company plans to sell 25,000 units at a selling price of $52 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 Variable expenses: Total variable expenses 0 0 Fixed expenses: 2. In the first quarter of year 3, the company plans to sell 25,000 units at a selling price of $52 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 Variable expenses: Total variable expenses 0 0 Fixed expenses: Total fixed expenses 0 $ 0