Problem 2-23 High-Low Method: Contribution Format Income Statement [LO2-5, LO2-6] Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement To have data to prepare such a statement the company has analyzed its expenses and has developed the following cost formulas Cost Formula Cost Cost of good sold Advertising expense Sai comissions Shipping expense S185 000 per quanto of Insurance expense Depreciation expense 5 000 per Guarter 510 500 per guate 505.000 per quante Management has concluded that shipping expense is a mixed cost containing both variable and forced cost elements Units sold and the related shipping expense over the last eight quarters follow Outer 31000 33 000 2000 34000 3175 000 5190 000 22.000 $195 000 35 000 4900 45 000 S15 000 200 000 5247 000 $223 000 Fourth Mlden Company's president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter Required: 1. Using the high-low method estimate a cost formula for shipping expense based on the data for the last eight quarters above cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter Milden Company's president would Required 1 Using the high-low method a com for i expense based on the data for the last eight quarters above s 2000 2 0 00 price of 555 per unit Prepare a contribution format income statement for the quarter Do not found your intermediate calculation 2. In the first quarter of Year 3. the company plans to sell 39.000 units at a seling price of 555 per unit. Prepare a contribution format income statement for the quarter (Do not round your cale Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Sales $ Variable expenses Cost of goods sold $ 1092.000 2.145.000 Sales commissions Shipping expense 1,376,700 768 300 Total variable expenses Contribution margin Fbred expenses Advertising expense Shipping expense insurance expense Depreciation expense 105.000 51,000 10.500 65.000 311.500 450.000 S Total foxed expenses Net operating income