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 5,100 6,200
Sales revenue $ 640,700 $ 759,900 $ 923,800
Cost of goods sold 236,500 280,500 341,000
Gross margin 404,200 479,400 582,800
Selling and administrative expenses:
Shipping expense 60,000 66,880 76,340
Advertising expense 66,000 66,000 66,000
Salaries and commissions 134,000 152,400 177,700
Insurance expense 6,000 6,000 6,000
Depreciation expense 34,000 34,000 34,000
Total selling and administrative expense 300,000 325,280 360,040
Net operating income $ 104,200 $ 154,120 $ 222,760
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.)Contribution margin $ *****