Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas:

Cost	Cost Formula
Cost of good sold	$27 per unit sold
Advertising expense	$177,000 per quarter
Sales commissions	6% of sales
Shipping expense	?
Administrative salaries	$87,000 per quarter
Insurance expense	$9,700 per quarter
Depreciation expense	$57,000 per quarter

Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data:

Quarter	Units Sold	Shipping Expense
Year 1:
First	23,000	$	167,000
Second	25,000	$	182,000
Third	30,000	$	224,000
Fourth	26,000	$	187,000
Year 2:
First	24,000	$	177,000
Second	27,000	$	192,000
Third	42,250	$	244,000
Fourth	39,250	$	220,000

Required:

1. Using the high-low method, estimate a cost formula for shipping expense in the form Y = a + bX.

2. In the first quarter of Year 3, the company plans to sell 29,000 units at a selling price of $57 per unit. Prepare a contribution format income statement for the quarter.