The Central Valley Company is a manufacturing firm that produces and sells a single product. The companys revenues and expenses for the last four months are given below. Central Valley Company Comparative Monthly Income Statements March April May June Sales in units 6,500 6,000 6,750 7,100 Sales revenue $ 812,500 $ 750,000 $ 843,750 $ 887,500 Less: Cost of goods sold 409,200 382,700 417,450 441,000 Gross margin 403,300 367,300 426,300 446,500 Less: Operating expenses Shipping expense 73,600 68,600 76,850 78,500 Advertising expense 85,000 85,000 85,000 85,000 Salaries & commissions 187,600 171,300 188,050 195,500 Insurance expense 10,500 10,500 10,500 10,500 Depreciation expense 54,000 54,000 54,000 54,000 Total operating expenses 410,700 389,400 414,400 423,500 Net income $ (7,400 ) $ (22,100 ) $ 11,900 $ 23,000 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs.

Required:

1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs.

2. Using the cost equations, prepare a contribution margin income statement (in good form) for September when 6,900 units are expected to be sold.