Provide the cost formula for each mixed expense

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Reference no: EM133092939

Question - Pelotoni Dips Inc. manufactures a single product that has become very popular in the Windsor area. The income statement for the most recent three months prior to taxes are as follows:

Pelotini Dips Inc. Income Statement Quarterly Statement ending March 31, 2021

 

Q1

Q2

Q3

Q4

Sales in Units

4,400

4,000

5,000

4,600

Sales Revenues

$440,000

$400,000

$500,000

$460,000

Less: COGS

$264,000

$240,000

$300,000

$276,000

Gross Margin

$176,000

$160,000

$200,000

$184,000

Less: Expenses

 

 

 

 

Advertising

$21,000

$21,000

$21,000

$21,000

Shipping

$35,000

$34,000

$38,000

$36,000

Salaries and Commissions

$83,000

$78,000

$90,000

$85,000

Insurance

$6,000

$6,000

$6,000

$6,000

Depreciation

$15,000

$15,000

$15,000

$15,000

Total Operating Expenses

$160,000

$154,000

$170,000

$163,000

Net Income (before taxes)

$16,000

$6,000

$30,000

$21,000

Required -

1. Using the high-low method, separate each mixed expense into variable and fixed expenses. Provide the cost formula for each mixed expense. [Hint: identify your expenses to find out the mixed expenses.]

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

3. Your marketing manager sat down with the budgeting team and predicts sales to be at the 4,500 units in the next quarter. Prepare a contribution margin income statement.

Reference no: EM133092939

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