Question 5 (6 points) A merchandising company, Romeo Co., prepared the following budget information for the year ending August 31, 2020: Sales (25,000 units) $640,000 Cost of goods sold 225,000 Gross margin $415,000 Selling and administrative expenses Sales salaries (per year) $185,000 Administrative salaries (per year) 76,000 Shipping Expenses (calculated as $1.30 per 32,500 293,500 unit) Operating income $121,500 1. Prepare a contribution format income statement in good form. (5 marks) 2. Describe how a variable cost behaves when there is a change in the level of activity. (1 mark)