Martin Office Supply Company has the following information available regarding costs and revenues for two recent months.
Question:
Martin Office Supply Company has the following information available regarding costs and revenues for two recent months. Selling price is $20.
March April
Sales revenue $60,000 $100,000
Cost of goods sold -36,000 - 60,000
Gross profit $24,000 $ 40,000
Less other expenses:
Advertising $ 600 $ 600
Utilities 4,200 5,600
Salaries and commissions 3,200 4,000
Supplies (bags, cleaning supplies etc.) 320 400
Depreciation 2,300 2,300
Administrative costs 1,900 1,900
Total -12,520 -14,800
Net income $11,480 $25,200
Required:
a. Identify each of the company's expenses (including cost of goods sold) as being either variable, fixed, or mixed.
b. By use of the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense.
c. What is the total cost equation?
d. Estimate total cost if sales = $75,000.
Expert Answer:
Identifying Expenses Variable Cost of goods sold directly proportional to sales Advertising likely t... View the full answer
