1. Analyze a mixed cost using a scattergraph plot and the high-low method. 2. Prepare Income...

 

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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 To aid in planning, Jay Corporation is preparing a contribution format income statement. Budgeted information for Quarter 1 of Year 3: Sales in units Sales price per unit D 1 Administrative salaries 2 Rent expense Depreciation expense 3 4 $ After analyzing expenses, the company has determined the following cost patterns. Cost of goods sold $ 29.00 per unit Sales commissions 9.50% per dollar of sales 26 17 Year 1 18 Quarter 1 $ SSS $ 17,000 48.00 $ 45,000.00 per quarter 27,000.00 per quarter 36,000.00 per quarter 5 Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the last eight quarters are: Total Shipping Cost $ 67,000.00 Units 12,500 Quarter2 Quarter 3 Quarter 4 Year 2 Quarter 1 Quarter2 Quarter 3 Quarter 4 555 $ $ $ SSSS $ $ $ 94,000.00 89,800.00 92,600.00 72,500.00 80,000.00 84,000.00 100,000.00 Use the data to answer the following. 1. Using the high-low method, determine a cost formula for shipping expenses. a 2 Total Shipping Cost 3 High level of activity 4 Low level of activity 5 Change in activity 21,000 13,800 20,000 13,700 14,000 14,300 22,500 Units Variable cost 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 per unit 2. Prepare a contribution format income statement for Quarter 1 of Year 3. 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 To aid in planning, Jay Corporation is preparing a contribution format income statement. Budgeted information for Quarter 1 of Year 3: Sales in units Sales price per unit D 1 Administrative salaries 2 Rent expense Depreciation expense 3 4 $ After analyzing expenses, the company has determined the following cost patterns. Cost of goods sold $ 29.00 per unit Sales commissions 9.50% per dollar of sales 26 17 Year 1 18 Quarter 1 $ SSS $ 17,000 48.00 $ 45,000.00 per quarter 27,000.00 per quarter 36,000.00 per quarter 5 Management has concluded that shipping expense is a mixed cost. Units shipped and the related shipping cost over the last eight quarters are: Total Shipping Cost $ 67,000.00 Units 12,500 Quarter2 Quarter 3 Quarter 4 Year 2 Quarter 1 Quarter2 Quarter 3 Quarter 4 555 $ $ $ SSSS $ $ $ 94,000.00 89,800.00 92,600.00 72,500.00 80,000.00 84,000.00 100,000.00 Use the data to answer the following. 1. Using the high-low method, determine a cost formula for shipping expenses. a 2 Total Shipping Cost 3 High level of activity 4 Low level of activity 5 Change in activity 21,000 13,800 20,000 13,700 14,000 14,300 22,500 Units Variable cost 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 per unit 2. Prepare a contribution format income statement for Quarter 1 of Year 3.

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