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A1 v i To aid in planning, Jay Corporation is preparing a contribution format income v A B c D E F l B To aid in 1annin_, Ia Co oration is re n . ' --_ a contribution format income statement. Budgeted information for Quarter 1 of Year 3: Sales in units 17,000 Sales price per unit $ 48 .00 After analyzing expenses, the company has determined the following cost patterns. Cost of goods sold $ 29.00 per unit Sales commissions 9.50% per dollar of sales Administrative salaries $ 45 ,000 .00 per quarter Rent expense $ 27,000.00 per quarter Depreciation expense $ 36,000.00 per quarter Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the last eight quarters are: Year 1 Total Shipping Cost Units Quarter 1 $ 67 ,000.00 12,500 QuarterZ $ 94,000.00 21 ,000 Quarter 3 $ 89 300.00 13,800 Quarter 4 $ 92,600.00 20,000 22 Year 2 I , u - '. I] I I I I n 4 . Sheet1 (+3 I4II ITI 21 Quarter 4 92,600.00 20,000 22 Year 2 23 Quarter 1 EA EA 72,500.00 13,700 24 Quarter2 80,000.00 14,000 25 Quarter 3 26 Quarter 4 tA tA 84,000.00 14,300 100,000.00 22,500 27 28 Use the data to answer the following. 29 30 1. Using the high-low method, determine a cost formula for shipping expenses. 31 32 Total Shipping Cost Units 33 High level of activity 34 Low level of activity 35 Change in activity 36 37 Variable cost per unit 38 39 Compute the fixed cost portion using the high level of activity. 40 Total cost at high level of activity 41 Less: Variable cost element 2 Total fixed cost 4343 44 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 45 46 Jay Corporation 47 Budgeted Contribution Format Income Statement 48 For Year 3 , Quarter 1 49 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: 58 Administrative salaries 59 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total xed expenses 63 Net operating income Formatting Table Styles Clipboard Font Styles A3 X V A B C D E F Given the following information complete a CVP analysis 2 for JPL, Inc.: 3 4 Unit sales 11,200 units 5 Selling price per unit $75 per unit 6 Variable expenses per unit $45 per unit 7 Fixed expenses $210,000 9 Use the data to answer the following. 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit per unit 13 Variable expenses per unit per unit 14 Contribution margin per unit per unit 15 16 CM ratio 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales units 21 Break-even in dollar sales 22 23 3. Compute the margin of safety 24 Margin of safety in dollarsL'M ratio Variable expense ratio 2. Compute the breakeven point Break-even in unit sales units Break-even in dollar sales 3. Compute the margin of safety Margin of safety in dollars Margin of safety percentage 4. Compute the degree of operating leverage Sales Variable expenses Contribution margin Fixed expenses Net operating income Degree of operating leverage