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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
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 of good sold $ 21 per unit sold Cost Formula $ 171,000 per quarter 4% of sales P Advertising expense Sales commissions Administrative salaries Shipping expense Insurance expense Depreciation expense $ 81,000 per quarter $9,100 per quarter $ 51,000 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: 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 Year 1: First Second Third Shipping Expense. Units Sold 17,000 19,000 $ 161,000 $ 176,000 24,000 $ 218,000 Fourth 20,000 $181,000 A Year 2: First 18,000 Second 21,000 $171,000 $186,000 Third 27,000 $ 231,000 Fourth 24,000 $ 207,000 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 23,000 units at a selling price of $51 per unit. Prepare a contribution format income statement for the quarter. 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 23,000 units at a selling price of $51 per unit. Prepare a contribution format income statement for the quarter. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using the high-low method, estimate a cost formula for shipping expense in the form Y-a + bx. (Round the Variable cost per unit to 2 decimal places.) X In the first quarter of Year 3, the company plans to sell 23,000 units at a selling price of $51 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement Variable expenses: For the First Quarter, Year 3 Total variable expenses Fixed expenses
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