Contribution Format Income Statement
PROBLEM 2–23 High-Low Method; Contribution Format Income Statement [LO4, LO5]
Alden Company has decided to use a contribution format income statement for internal planning purposes. The company has analyzed its expenses and has developed the following cost formulas:Â
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 Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters are given below:
Quarter Units Sold Shipping Expense
Year 1: Â
First . . . . . . . . . . . . . . . . . 16,000 $160,000
Second . . . . . . . . . . . . . 18,000 $175,000
Third . . . . . . . . . . . . . . . 23,000 $217,000
Fourth . . . . . . . . . . . . . . 19,000 $180,000
Year 2: Â
First . . . . . . . . . . . . . . . . . 17,000 $170,000
Second . . . . . . . . . . . . . 20,000 $185,000
Third . . . . . . . . . . . . . . . 25,000 $232,000
Fourth . . . . . . . . . . . . . . 22,000 $208,000
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Management would like a cost formula derived for shipping expense so that a budgeted con- tribution format income statement can be prepared for the next quarter.
 Required:
1. Â Â Â Using the high-low method, estimate a cost formula for shipping expense.
2. Â Â Â In the first quarter of Year 3, the company plans to sell 21,000 units at a selling price of $50 per unit. Prepare a contribution format income statement for the quarter.
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Answers
Status NEW
Posted 03 May 2017 01:05 PM
My Price 8.00
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Attachments
file 1493817297-1363910_1_636293127778354243_1363910.xlsx preview (452 words )
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