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 1 To aid in planning, Jay Corporation is preparing a contribution format income statement 3 Budgeted information for Quarter 1 of Year 3: Sales in units 5 Sales price per unit 17,000 48.00 $ 7 After analyzing expenses, the company has determined the following cost patterns. 8 Cost of goods sold $ 29.00 per unit 9 Sales commissions 9.50% per dollar of sales 10 11 12 13 Administrative salaries Rent expense Depreciation expense $ $ 45,000.00 per quarter 27,000.00 per quarter 36,000.00 per quarterETE 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 1 18 Quarter 1 19 Quarter2 20 Quarter 3 21 Quarter 4 22 Year 2 UU Total Shipping Cost 67,000.00 94,000.00 89,800.00 92,600.00 12,500 21,000 13,800 20,000 Year 2 Quarter 1 Quarter2 Quarter 3 Quarter 4 meses as 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. 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 2 Total fixed cost 4 2. Prepare a contribution format income statement for Quarter 1 of Year 3. Jay Corporation Budgeted Contribution Format Income Statement For Year 3, Quarter 1 00 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 Rent expense 60 Shipping expense 61 Depreciation expense 62 Total fixed expenses 63 Net operating income