MQ8

Gallop Corporation prepared the following report for the first quarter of this year. $7,000,000 3,175,000 3,825, eee 10 points Sales (@$2,800 per unit) Less: Cost of goods sold Gross margin Less: Selling expenses Administrative expenses Income $1,075,000 1,119,000 8 02:38:32 2,185,000 $1,640,000 Gallop's controller, Nancy Johnstone, studied the costs in detall, particularly focusing on cost behaviour. Her analysis revealed the following: Fixed portion of the cost of goods sold for the quarter amounted to $1,075,000. Of the selling expenses, 20% was variable with respect to the number of units. All of the administrative expenses were fixed. Required: 1. Express the cost of goods sold and the selling expenses in terms of cost equations. (Round the "Varlable cost" to 2 decimal places.) Cost of goods sold per quarter X Selling expenses Y = per quarter X 10 points 8 02:38:15 2. Redo the above Income statement using a contribution margin approach. (Do not round Intermedlate calculations.) GALLOP CORPORATION Income Statement For the First Quarter of this Year Less: Variable costs Less: Fixed expenses