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	$25 per unit sold
Advertising expense	$175,000 per quarter
Sales commissions	7% of sales
Shipping expense	?
Administrative salaries	$85,000 per quarter
Insurance expense	$9,500 per quarter
Depreciation expense	$55,000 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	21,000	$	165,000
Second	23,000	$	180,000
Third	28,000	$	222,000
Fourth	24,000	$	185,000
Year 2:
First	22,000	$	175,000
Second	25,000	$	190,000
Third	35,400	$	237,000
Fourth	32,400	$	213,000

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 31,000 units at a selling price of $55 per unit. Prepare a contribution format income statement for the quarter.