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 Formula $30 per unit sold $186,000 per quarter 8% of sales Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $96,000 per quarter $10,600 per quarter $66,000 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: Shipping Expense Units Sold Quarter Year 1: First Second Third Fourth Year 2: First Second Third Fourth 32,000 34,000 39,000 35,000 $176,000 $191,000 $233,000 $ 196,000 33,000 36,000 46,400 43,400 $186,000 $ 201,000 $ 248,000 $ 224,000 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 41,000 units at a selling price of $59 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. Required 1 Required 2 > In the first quarter of Year 3, the company plans to sell 41,000 units at a selling price of $59 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Sales $ 2,419,000 Variable expenses: Cost of goods sold $ 1,230,000 Sales commissions 193,520 Shipping expense 1,423,520 995,480 Total variable expenses Contribution margin Fixed expenses: Advertising expense Shipping expense Administrative salaries Insurance expense $ 186,000 10,600 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 Formula $30 per unit sold $186,000 per quarter 8% of sales Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense $96,000 per quarter $10,600 per quarter $66,000 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: Shipping Expense Units Sold Quarter Year 1: First Second Third Fourth Year 2: First Second Third Fourth 32,000 34,000 39,000 35,000 $176,000 $191,000 $233,000 $ 196,000 33,000 36,000 46,400 43,400 $186,000 $ 201,000 $ 248,000 $ 224,000 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 41,000 units at a selling price of $59 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. Required 1 Required 2 > In the first quarter of Year 3, the company plans to sell 41,000 units at a selling price of $59 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Sales $ 2,419,000 Variable expenses: Cost of goods sold $ 1,230,000 Sales commissions 193,520 Shipping expense 1,423,520 995,480 Total variable expenses Contribution margin Fixed expenses: Advertising expense Shipping expense Administrative salaries Insurance expense $ 186,000 10,600
