### Shipping Costs and Contribution Margin Analysis#### 1. High-Low Method for Shipping CostsTo determine a cost formula for shipping costs, the high-low method is used. This involves the following steps:- **Identify High and Low Activity Levels:** - **High Level of Activity:** - Total Cost: $100,000 - Units: 22,500 - **Low Level of Activity:** - Total Cost: $72,000 - Units: 12,500- **Calculate the Change in Costs and Activity:** - Change in Cost: $28,000 - Change in Activity: 10,000 units- **Determine Variable Cost per Unit:** - Variable Cost per Unit = Change in Cost / Change in Activity - Variable Cost per Unit = $2.80- **Calculate Fixed Costs:** - Total Cost at High Level of Activity: $100,000 - Total Variable Cost Element: $63,000 - Total Fixed Cost: $37,000#### 2. Contribution Margin Income Statement for Quarter 1 of 2024**Jay Corporation****Budgeted Income Statement****For 2024, Quarter 1**- **Sales:** $816,000- **Variable Expenses:** - Cost of Goods Sold: $493,000 - Sales Commissions: $77,520 - Shipping Expenses: $27,000- **Total Variable Expenses:** - **Contribution Margin:** $218,480- **Fixed Expenses:** - Administrative Salaries: $45,000 - Advertising Expense: $36,000 - Depreciation: $13,000 - Shipping Expense: $11,000- **Total Fixed Expenses:** - **Net Operating Income:** $113,480This outline illustrates how to use the high-low method to establish a cost formula for shipping, and shows a detailed contribution margin income statement, providing insights into the financial structure and operational efficiency during the specified period. **Jay Corporation: Contribution Income Statement Preparation****Overview:**Jay Corporation is preparing contribution income statements for internal planning.**Budgeted Information for Quarter 1 of 2024:**- Sales in units: 17,000- Sales price per unit: $48.00**Cost Patterns Analysis:**- Cost of Goods Sold (per unit): $29.00- Sales Commissions (per dollar of sales): 9.50%- Administrative Salaries (per quarter): $45,000- Rent Expense (per quarter): $27,000- Depreciation Expense (per quarter): $36,000**Shipping Costs Analysis:**Shipping has been classified as a mixed cost, combining fixed and variable components. **Total Shipping Costs and Units Overview:**| Year | Quarter | Total Cost | Units ||------|----------|------------|--------|| 2022 | Quarter 1| $67,000 | 12,500 || | Quarter 2| $94,000 | 21,000 || | Quarter 3| $89,500 | 18,300 || | Quarter 4| $92,500 | 20,500 || 2023 | Quarter 1| $72,500 | 13,700 || | Quarter 2| $79,300 | 18,100 || | Quarter 3| $84,000 | 14,300 || | Quarter 4| $100,000 | 22,500 |The table reveals variations in shipping costs and units over eight quarters, indicating a mixed cost behavior influenced by both volume and fixed elements.

Income statement is the one which is prepared by the entity to show the amount of operating income…

1 2 Jay Corporation has decided to prepare contribution income statements for internal planning. 3 4 Budgeted information for Quarter 1 of 2024: 5 Sales in units 6 Sales price per unit 7 8 9 10 11 After analyzing expenses, the company has determined the following cost patterns. Cost of Goods Sold (per unit) $29.00 Sales Commissions (per dollar of sales) 9.50% Administrative Salaries (per quarter) 12 Rent Expense (per quarter) 13 Depreciation Expense (per quarter) 14 2022 17,000 $48.00 15 Shipping has been determined to be a mixed cost with the following total costs and units: 16 17 18 Quarter 1 19 Quarter2 20 Quarter 3 21 Quarter 4 22 2023 23 24 25 26 Quarter 1 Quarter2 Quarter 3 Quarter 4 $45,000 $27,000 $36,000 Total Cost $67,000 $94,000 $89,800 $92,600 $72,500 $80,000 $84,000 $100,000 Units 12,500 21,000 13,800 20,000 13,700 14,000 14,300 22,500

1 2 Jay Corporation has decided to prepare contribution income statements for internal planning. 3 4 Budgeted information for Quarter 1 of 2024: 5 Sales in units 6 Sales price per unit 7 8 9 10 11 After analyzing expenses, the company has determined the following cost patterns. Cost of Goods Sold (per unit) $29.00 Sales Commissions (per dollar of sales) 9.50% Administrative Salaries (per quarter) 12 Rent Expense (per quarter) 13 Depreciation Expense (per quarter) 14 2022 17,000 $48.00 15 Shipping has been determined to be a mixed cost with the following total costs and units: 16 17 18 Quarter 1 19 Quarter2 20 Quarter 3 21 Quarter 4 22 2023 23 24 25 26 Quarter 1 Quarter2 Quarter 3 Quarter 4 $45,000 $27,000 $36,000 Total Cost $67,000 $94,000 $89,800 $92,600 $72,500 $80,000 $84,000 $100,000 Units 12,500 21,000 13,800 20,000 13,700 14,000 14,300 22,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A10 please help.....
The following sales were budgeted for the year: Product A Product B Product C Demand (units) 1,000 2,000 3,000 Selling price $15 $20 $30 Profit per unit $2 $5 $2 Actual sales for the year showed the following results: Product A Product B Product C Units sold 1,100 2,050 2,800 Sales value $17,050 $38,950 $86,800 Profit $3,080 $10,455 $6,160 What is the sales mix variance? $2,292 Adverse $1,845 Favorable $200 Favorable $50 Favorable
e. Manufacturing Overhead Budget Sales Revenue The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc. The 2016 quarterly unit sales estimates and projected sales prices per unit areas follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales units 9,200 9,300 9,500 9,400 Price per unit $90 $90 $90 $90 Also, note that that projected sales (and projected production) for Quarter 1 of 2017 is 10,000 units Product Cost Assumptions The company's product requires two raw materials, resistors and switches. Cost parameters are as follows: Number of Components/Unit Switches @ $4/switch 3 Resistors @ $8/switch 2 Number of minutes required to complete finished unit Direct labor minutes per unit Machine minutes per unit 30 12 Hour rates used Direct labor rate= $10/hour Manufacturing overhead rates (i.e., the PDOHRS to use to apply overhead) Labor-related= $25/hour Machine-related= $40/hour Eastern applies manufacturing overhead using two cost…
Solve requriement a and b
6. Prepare a budgeted income statement using the information shown. Sales units 84,000 22 Sales price per unit Uncollectible expense Direct material per unit Direct labor hours per unit Direct labor rate per hour Manufacturing overhead Variable sales and administration expenses per unit sold Fixed sales and administration expenses 1% $4 $ 1.50 0.8 19 $14,000 $ 2.10 $23,000 Тахes 15%* *of income before taxes %24
3.3 Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expenseby R100 000 is expected to increase sales by 400 units.3.4 How many units must be sold if the company wishes to earn a net profit of R298 920. Using the below information answer the above questions INFORMATIONSamcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30June 2022:1. Total production and sales 2 400 units2. Selling price per table R1 2003. Variable manufacturing costs per table: Direct material R288 Direct labour R192 Overheads R964. Fixed manufacturing overheads R216 9605. Other costs: Fixed marketing and administrative costs R144 000 Sales commission 5%
Please do not give solution in image format thanku
1. wHAT IS THE CASH PAYMENTS IN QUARTER 3 2. HOW MUCH IS THE TOTAL MANUFACTURING OVERHEAD BUDGET 2023?
Q2: The following monthly budgeted data are available for a wholesale company: Product Product Product A B с $800,000 $400,000 $200,000 640,000 240,000 140,000 $160,000 $160,000 $60,000 Sales Variable expenses Contribution margin The budgeted total fixed expense is $ 150,000. Required: a) Calculate the break-even sales for the month? b) Calculate the margin of safety in sales dollars? c) What is the sales Mix?
am. 40.
Please do not give solution in image format thanku
sa