Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retiyel. 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 Formula $25 per unit sold $175,000 per quarter 7% of sales Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $85,000 per quarter $9,500 per quarter $55,000 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 Expense Units Sold Quarter Year 1: First Second Third Fourth Year 2: First Second Third Fourth 21,000 23,000 28,000 24,000 $165,000 $180,000 $222,000 $185,000 22,000 25,000 35,400 32,400 $175,000 $ 190,000 $237,000 $213,000 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 0 $ 0 per unit Variable cost per unit Fixed cost element 2. In the first quarter of Year 3, the company plans to sell 31,000 units at a selling price of $55 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: WSKA Total variable expenses Fixed expenses Total fixed expenses