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Question(s) / Instruction(s):

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:

Cost          Cost Formula

.

.

.

Management would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter.

Required:

1.            Using the high-low method, estimate a cost formula for shipping expense based on the data for the last eight quarters above.

2.            In the first quarter of Year 3, the company plans to sell 29,000 units at a selling price of $57 per unit. Prepare a contribution format income statement for the quarter.


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