Question
Question 1 Walter & Randstad. Ltd. is a European is a single distributor of a product that grew popularity among European consumers. Below is the
Question 1
Walter & Randstad. Ltd. is a European is a single distributor of a product that grew popularity among European consumers. Below is the income statement for the three most recent months.
Walter & Randstad.
Income Statements
For the three Months Ended December 31
| October | November | December |
Sales in units | 5000 | 5500 | 6000 |
Sales | $500,000 | $550,000 | $600,000 |
Cost of Goods Sold | $300,000 | $320,000 | $360,000 |
Gross Margin | $200,000 | $230,000 | $240,000 |
Selling & Administrative Expenses: |
|
|
|
Advertising expense | $29,000 | $29,000 | $29,000 |
Salaries & commissions | $34,000 | $38,000 | $40,000 |
Insurance expenses | $8,000 | $8,000 | $8,000 |
License Fee | $60,000 | $62,000 | $65,000 |
Depreciation expenses | $20,000 | $20,000 | $20,000 |
Total Selling & Administrative Expenses | $137,000 | $143,000 | $147,000 |
Net Operating Income | $63,000 | $87,000 | $97,000 |
Required:
- Identify each of the companys expenses (including Cost of goods sold) as variable, fixed or mixed cost.
- Using the high-low method, identify and separate mixed expenses into variable and fixed elements. State the cost formula for each mixed expenses.
- Redo the companys income statement at the 6000 unit level of activity using the contribution format.
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