Use the high$-$low method to calculate the variable and fixed components of Cost of Goods Sold.

Cost Behavior

Sales Volume $10,00015,00020,000$

Sales revenue $ $400,000$ $ $600,000$ $ $800,000$

Cost of goods sold $295,000435,000575,000$

Gross profit $105,000165,000225,000$

Operating expenses

Advertising expense $12,50012,50012,500$

Salaries and wages expense $60,00070,00080,000$

Insurance expense $7,0007,5008,000$

Postage expense $22,50033,75045,000$

Depreciation expense $18,00018,00018,000$

Total operating expenses $120,000141,750163,500$

Operating income $ $(15,000)$ $ $23,250$ $ $61,500$

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