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		6,800			6,300			7,050			7,300
Sales revenue	$	829,600		$	768,600		$	860,100		$	890,600
Less: Cost of goods sold		418,500			393,000			426,250			444,000
Gross margin		411,100			375,600			433,850			446,600
Less: Operating expenses
Shipping expense		76,000			71,000			79,250			80,000
Advertising expense		88,000			88,000			88,000			88,000
Salaries & commissions		192,800			176,500			193,250			198,500
Insurance expense		10,800			10,800			10,800			10,800
Depreciation expense		57,000			57,000			57,000			57,000
Total operating expenses		424,600			403,300			428,300			434,300
Net income	$	(13,500	)	$	(27,700	)	$	5,550		$	12,300

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 7,200 units are expected to be sold.