Reference no: EM13597576
The Central Valley Company is a merchandising firm that sells a single product. The company's revenues and expenses for the last three months are given below:
- Central Valley Company
- Comparative Income Statement
- For the Second Quarter
- April May June
- Sales in units 4,300 5,250 6,100
- Sales revenue $ 627,800 $ 766,500 $ 890,600
- Cost of goods sold 227,900 278,250 323,300
Gross margin 399,900 488,250 567,300
- Selling and administrative expenses:
- Shipping expense 50,000 58,265 65,660
- Advertising expense 66,000 66,000 66,000
- Salaries and commissions 136,000 158,800 179,200
- Insurance expense 6,000 6,000 6,000
- Depreciation expense 39,000 39,000 39,000
Total selling and administrative expense 297,000 328,065 355,860
Net operating income $ 102,900 $ 160,185 $ 211,440
Required:
a.Determine which expenses are mixed and, by use of the high-low method, separate each mixed expense into its variable and fixed components. State the cost formula for each mixed expense. (Round "per unit" answers to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)
Cost formula
$ + $ per unit
$ + $ per unit
b. Compute the company's total contribution margin for May. (Round your answer to the nearest whole number. Omit the "tiny_mce_markerquot; sign in your response.)