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21 August, 18:20

Redo the company's income statement at the 5,000-unit level of activity using the contribution format.

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  1. 21 August, 20:26
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    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
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