1) | Expenses | Classification | ||||||||
cost of goods sold | Variable | |||||||||
Advertising expense | fixed | |||||||||
shipping expense | mixed | |||||||||
Salaries and commission | mixed | |||||||||
insurance expense | fixed | |||||||||
Depreciation expense | fixed | |||||||||
2) | High low method | |||||||||
shipping expense | ||||||||||
units | cost | |||||||||
high | 5,000 | 38,000 | ||||||||
low | 4,000 | 34,000 | ||||||||
difference | 1,000 | 4,000 | ||||||||
variable expense per unit 4000/1000 = $4 | ||||||||||
fixed expense =38000-5000*4 =18000 | ||||||||||
Salaries and commission | ||||||||||
units | cost | |||||||||
high | 5,000 | 90,000 | ||||||||
low | 4,000 | 78,000 | ||||||||
difference | 1,000 | 12,000 | ||||||||
Variable expense per unit = 12000/1000=$12.00 | ||||||||||
fixed expense = 90000-5000*12 =30000 | ||||||||||
cost formula | ||||||||||
Variable cost | Fixed cost | Formula | ||||||||
shipping expense | 4 | per unit | 18,000 | Y= | 18,000 | + | 4 | per unit | ||
Salaries & commission | 12 | per unit | 30,000 | Y= | 30,000 | + | 12 | per unit | ||
3) | Sales in units | 5000 | ||||||||
Sales | 500,000 | |||||||||
Variable expense | ||||||||||
Cost of goods sold | 300,000 | |||||||||
Shipping expense | 20,000 | |||||||||
Salaries and commission | 60000 | |||||||||
380,000 | ||||||||||
Contribution margin | 120,000 | |||||||||
Fixed expense | ||||||||||
Advertising expense | 21,000 | |||||||||
Shipping expense | 18,000 | |||||||||
Salaries & commission | 30,000 | |||||||||
insurance expense | 6,000 | |||||||||
Depreciation expense | 15,000 | |||||||||
90,000 | ||||||||||
Net income | 30,000 |
Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of...
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urgent solution
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