Question

For the three months ended June 30, 202X High-Low Method Contribution Form Income Statement P 6A - A Orange Company Income Statements Sales in units June April 7,000 May 10,000 9,000 $ 280,000 $ 400,000 210,000 300,000 $ 70,000 $100,000 $ 360,000 270,000 $ 90,000 Sales Cost of goods sold Gross margin Operating expenses: Advertising Depreciation Rent Salaries and commissions Utilities Total operating expenses Net income $ $ 5,000 $ 5,000 3,000 3,000 8,000 8,000 34,000 40,000 12,500 17,000 $ 62,500 $ 73,000 $ 7,500 $ 27,000 5,000 3,000 8,000 38,000 15,500 69,500 20,500 $ $ Required: 1) Classify each of the six expenses, including cost of goods sold, as variable, fixed or mixed. 2) For each of the mixed expenses found in requirement (1), find the cost equation stated in the form: Y = a + bx. 3) Prepare the income statement, for June, in contribution form.

Answer 1

Question

Answer:

1 Cost of Good sold Advertising Depreciation Rent salaries and Commission utiliteis classification of Expenses Variable Expenses Fixed Fixed Fixed Mixed Mixed 2 salaries and Commission Variable cost Change in Cost / change in units sales $40000 - $34000/10000-7000 $2.00 Variable cost Y=a+bx Y=20000+ 2x Y= total cost a= Fixed cost x= units b= Variable cost Fixed Costa Toal Variable Total Cost- Costa Variable Total Total Variable cost Units Cost cost 7000 $14,000 $34,000 $20,000 10000 $20,000 $40,000 $20,000 Vaiabale Cost Units $2.00 $2.00 2 Utilities Variable cost variable cost Y=a+bx Change in Cost / change in units sales $17000 - $12500/10000-7000 $1.50 Y=2000+1.5X Y=total cost a=Fixed cost x= units b= Variable cost Fixed Costa Toal Variable Total Cost- Cost= Variable Total Total Variable Vaiabale Cost Units cost Units Cost cost $1.50 7000 $10,500 $12,500 $2.000 $1.50 10000 $15,000 $17,000 $2,000 3 Income statement for June, In contribution form Per unit 9000 $3,60,000 $40 $30 $2 $2 $2,70,000 $18,000 $13,500 $58,500 Sales in units Sales Variable Cost Cost of Good sold salaries and Commission utiliteis Contribution Fixed Expenses Advertising Depreciation Rent salaries and Commission utilities Net Income $5,000 $3,000 $8,000 $20,000 $2,000 $20,500