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M Homework Ch 2 f Liezto.mheducation.com/hm.tpx :: Apps M Watch movies online YouTube G Google ..: Homepage-Portland Col × Google Translate -Electronics, Cars, Fash Bank PCCC News 3 NBA.com N Netflix eChegg com Other bookmarks Frankel Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses (in British pounds) for the last three months are given below. Frankel Ltd Comparative Income Statements For the Three Months Ended June 30 April 1,800 une Sales in units 3,300 4.950 Sales revenue E 315.000 E577.500 £866.250 366,300 Cost of goods sold Gross margin Selling and administrative expenses 133,200 244,200 181,800 333,300 499,950 Shipping expense Advertising expense Salaries and commissions nsurance expense Depreciation expense 42,500 69,500 103,400 9,000 41,000 60,500 69,500 160,400 9,000 41,000 80,300 69,500 223,100 9,000 41,000 Total selling and administrative expenses 265,400 340,400 422,900 Net operating income (loss) £ (83,600) E(7,100) E77,050 (Note: Frankel Ltd.'s income statement has been recast in the functional format common in the United States. The British currency is the pound, denoted by E.) Required 1. Identify each of the company's expenses (including cost of goods sold) as either variable, fixed, or mixed. Expenses Cost of goods sold Shipping expense Advertising expense Salaries and commissions Classification (Click to select) (Click to select) (Click to select) (Click to select) I'm Cortana. Ask me anything 10:29 AM 4/9/2016

Explanation / Answer

Answer 1. 1. Expenses Classification Remarks Cost of Goods Sold Variable Expenses A variable expense is a expense which vary with production output Shipping Expenses Mixed Expenses Mixed costs consist of a fixed component and a variable component. Advertising Expenses Fixed expenses A fixed expense is a expense which is constant or remain same with vary in production output Salaries & Commissions Mixed Expenses Mixed costs consist of a fixed component and a variable component. Insurance expenses Fixed expenses A fixed expense is a expense which is constant or remain same with vary in production output Depreciation Expenses Fixed expenses A fixed expense is a expense which is constant or remain same with vary in production output Answer 1. 2. As per High End low Method Variable Cost = Change in Cost / Change in Activity Shipping Expenses Variable Cost per Unit = ($80300 - $42500) / (4950 - 1800) = $12 per Unit Fixed Cost = $80300 - 12 X 4950 Units = $20900 Cost Volume Formula for Shipping Expenses Y = $20900 + $12x Salaries & Commission Variable Cost per Unit = ($223100 - $103400) / (4950 - 1800) = $38 per Unit Fixed Cost = $223100 - 38 X 4950 Units = $35000 Cost Volume Formula for Salaries & Commission Y = $35000 + $38x Answer 1. 3. Frankel Ltd. Income Statement For the Month Ended June 30 Sales (4950 Units X $175)          866,250 Variable Expenses Cost of Goods Sold (4950 Units X $74)          366,300 Shipping Exp. (4950 Units X $12)            59,400 Salaries & Commission (4950 Units X $38)          188,100          613,800 Contribution Margin          252,450 Fixed Expenses Shipping Exp.            20,900 Salaries & Commission            35,000 Advertising exp.            69,500 Insurance Exp.              9,000 Depreciation exp.            41,000          175,400 Net Operating Income            77,050 As per Chegg Guidelines, You can ask one question at one time and having four subparts. For other questions please ask it again.

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