Manuela Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries$83,000 per quarter Insurance expense Depreciation expense $23 per unit sold $173,000 per quarter 6% of sales $9,300 per quarter $53,000 per quarter Manuela Management has come to conclusion that shipping expense is a mixed cost, Units sold and the related shipping expense over the last eight quarters follow Shipping Units SoldExpense Year 1 First Second Third Fourth 19,000 $163,000 21,000 $178,000 26,000 S220,000 22,000$183,000 Year 2 First Second Third Fourth 20,000 $173,000 23,000 $188,000 33,400 $235,000 30,400$211,000 Manuela Company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter Type here to search 0
