Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense. (Omit the "£" sign in your response.)
Shipping Expense:
(86,200 - 45,900) / (5,100 - 2,000) = £13 variable cost per unit
86,200 - (13 x 5,100) = £19,900 fixed cost
£ Y = £19,900 + £13 X
Salaries and Commissions
(238,400 - 114,400) / (5,100 - 2,000) = £40 variable cost per unit
238,400 - (40 x 5,100) = £34,400 fixed cost
£ Y = £34,400 + £40 X
3.
Redo the company’s income statement at the 5,100-unit level of activity using the contribution format. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "£" sign in your response.)
Frankel Ltd.
Income Statement
For the Month Ended June 30
Sales revenue 912900
Variable expenses:
Cost of goods sold 346800
Shipping expenses 5,100 x 13 = 66,300
Commissions 5,100 x 40 = 204,000
Contribution margin 295,800
Fixed expenses:
Fixed shipping 19,900
Insurance expenses 9000
Depreciation expenses 42700
Sales salaries 34,400
Advertising expenses 69200
Net operating Income 120600
