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Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense ? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $ 234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a +bX. 2. In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Required 1Required 2 Using the high-low method, estimate a cost formula for shipping expense in the form Y = a + bX. (Round the Variable cost per unit to 2 decimal places.) Y = + X In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses

Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense ? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $ 234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a +bX. 2. In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Required 1Required 2 Using the high-low method, estimate a cost formula for shipping expense in the form Y = a + bX. (Round the Variable cost per unit to 2 decimal places.) Y = + X In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a + bX. 2. In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Required 1Required 2 Using the high-low method, estimate a cost formula for shipping expense in the form Y = a + bX. (Round the Variable cost per unit to 2 decimal places.) Y = + X In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses
Transcribed Image Text:Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a + bX. 2. In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Required 1Required 2 Using the high-low method, estimate a cost formula for shipping expense in the form Y = a + bX. (Round the Variable cost per unit to 2 decimal places.) Y = + X In the first quarter of Year 3, the company plans to sell 43,000 units at a selling price of $60 per unit. Prepare a contribution format income statement for the quarter. Milden Company Budgeted Contribution Format Income Statement For the First Quarter, Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses
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