: Excel Project #2 Chapters 6 & 7 - Cost Behavior, High-Low Method, Contribution Margin Income Statement, and Break-Even Analysis

Edwards & Shaw is a merchandising company that is the sole distributor of a product that is increasing in popularity. The companys income statement for the three most recent months is listed below.

Edwards and Shaw

Income Statement

For the Three Months Ending September

	July	August	September
Sales in Units	3,000	6,000	7,500
Sales Revenue	$900,000	$1,800,000	$2,250,000
Cost of Goods Sold	255,000	480,000	592,500
Gross Margin	645,000	1,320,000	1,657,500
Operating Expenses:
Advertising Expense	8,500	8,500	8,500
Shipping Expense	16,500	33,000	41,250
Salaries and Commissions	72,000	99,000	112,500
Legal Expense	5,000	5,000	5,000
Depreciation Expense	12,000	12,000	12,000
Total Operating Expenses	114,000	157,500	179,250
Operating Income	$531,000	$1,162,500	$1,478,250

3.) Edwards and Shaw expect to sell 8,000 units in October. Prepare an absorption income statement for October.

3. Edwards and Shaw expect to sell 8,000 units in October. Prepare an absorption income statement for October (assume we produce and sell the same number of units).

Sales in Units

8,000

Sales Revenue

Operating Income