Question

Variable cost per unit 1. Analyze a mixed cost using a scattergraph plot and the high-low method. 2. Prepare income statements for a merchandising company using the traditional and contribution formats. XI FILE . HOME High Low Method Contribution Format Income Statement - Excel PAGE LAYOUT FORMULAS DATA REVIEW VIEW Compute the fixed cost portion using the high level of activity. Total cost at high level of activity Less: Variable cost element Total fixed cost INSERT B IU. A !. Prepare a contribution format income statement for Quarter 1 of Year 3. Paste Clipboard AL 1- Font X Alignment Number Conditional Formatas Cel Calls Editing Formatting Table Styles - 5 To aid in planning, Jay Corporation is preparing a contribution format income Jay Corporation Budgeted Contribution Format Income Statement For Year 3. Quarter 1 1 To aid in planning, Jay Corporation is preparing a contribution format income statement. 3 Budgeted information for Quarter 1 of Year 3: 4 Sales in units 5 Sales price per unit 17.000 48.00 ? After analyzing expenses, the company has determined the following cost patterns. Cost of goods sold 29.00 per unit Sales commissions 9504 per dollar of sales Sales Variable expenses: Cost of goods sold Sales commissions Shipping expense Total variable expenses Contribution margin "ixed expenses: Administrative salaries Rent expense Shinning exnense $ 11 12 13 Administrative salaries Rent expense Depreciation expense 45,000.00 per quarter 2700.00 per quarter 36,000.00 per quarter 15 Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the Last eight quarters are: 17 Year! 18 Quarter 1 19 Quarter2 20 Oxuarter 3 Total Shipping Cost 67,000.00 $ 94 .00 89 200.00 Units 12 500 21.000 S 13 800 Jay Corporation Budgeted Contribution Format Income Statement For Year 3, Quarter 1 89.800.00 92.600.00 13.00 20.000 Quarter 3 Quarter 4 Year 2 Quarter 1 Quarter2 Quarter 3 Quarter 4 72,500.00 80,000.00 84.000.00 100,000.00 13,700 14.000 14,300 22.500 Use the data to answer the following- 50 Sales 51 Variable expenses: 52 Cost of goods sold 53 Sales commissions 54 Shipping expense 55 Total variable expenses 56 Contribution margin 57 Fixed expenses: 58 Administrative salaries 59 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income 1. Using the high-low method, determine a cost formula for shipping expenses. Total Shipping Cost Units High level of activity Low level of activity Change in activity Variable cost per unit Compute the fixed cost portion using the high level of activity. Total cost at high level of activity Less: Variable cost element Total fixed cost

Answer 1

Using the high-low method, estimate a cost formula for shipping expense. 80 1. 81 Total Shipping Cost Units 82 High level of activity Low level of activity Change in activity 100000 22500 83 67000 12500 84 33000 10000 85 86 Variable Cost 3.30 Per Unit 87 (Change in shipping cost / change inUnits) 88 89 Compute the fixed cost portion using the high level of activity 90 91 Total Cost at High level of activity Less Variable Cost element (22500*3.30) 100000 92 74250 93 Total Fixed Cost 25750 94 95 96 97

Jay Corporation Budgeted Income Statement For the First Quarter of Year 3 61 62 63 Sales (17000 *48) Variable Expenses; Cost of Goods Sold (17000 *29) Sales Commision (816000 *9.50%) Shipping Expenses (17000*3.30) Total Variable Expenses Contribution Margin Fixed Expenses; 816,000 64 65 420,000 66 77,520 56,100 67 68 553,620 262,380 69 70 71 Adminstrative Salaries 45,000 27,000 25,750 36,000 72 Rent expense 73 Shipping Expenses Depreciation Expense Total Fixed Expenses Net Operating Income 74 75 133,750 128,630 76 77 78