Question

Problem 2-23 High-Low Method; Contribution Format Income Statement [LO2-5, LO2-6] Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense Cost Formula $22 per unit sold $172,000 per quarter 5% of sales $82,000 per quarter $9,200 per quarter $52,000 per quarter Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow: Shipping Units Sold Expense Quarter Year 1: First 18,000 $162,000 Second 20,000 $177,000 25,000 219,000 21,000 182,000 Third Fourth Year 2: First 19,000 $172,000 Second 22,000 $187000 30,000 $234,000 27,000 $ 210,000 Third Fourth

Answer 1