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	$28 per unit sold
Advertising expense	$178,000 per quarter
Sales commissions	6% of sales
Shipping expense	?
Administrative salaries	$88,000 per quarter
Insurance expense	$9,800 per quarter
Depreciation expense	$58,000 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	24,000	$	168,000
Second	26,000	$	183,000
Third	31,000	$	225,000
Fourth	27,000	$	188,000
Year 2:
First	25,000	$	178,000
Second	28,000	$	193,000
Third	38,400	$	240,000
Fourth	35,400	$	216,000

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 $58 per unit. Prepare a contribution format income statement for the quarter.