Problems 1·(20 points) revenues and expenses for the last three months are given

Question

Problems 1·(20 points) revenues and expenses for the last three months are given below Cosgrove, Inc, is a wholesaler that distributes a single product. The company's Cosgrove Company Comparative Income Statement For the Three Months Ended June 30 Apri May June Sales in units 3,000 $830,000 $420,000 Less cost of goods sold168.000 252,000 Sales revenue $525,000 19,000 37 000 210,000 252 000 378,000 Gross margin Less operating expenses: 315,000 Shipping expense. Advertising expense...107.000 Salaries and commissions 44,000 70,000 50,000 70,000 125,000 56,000 70,000 143,000 9,000 9,000 9,000 Depreciation expens 42,000 20.000) 9.000 3.000 Net operating income (loss. Required: Determine which operating expenses are mixed and, by use of the high- low method, separate each mixed expense into variable and fixed elements. (Use sales in units as the activity measure.) State the cost formula for each mixed expense. a. b. Compute the company's contribution margin for May (Put your work and answers on the next page)

Explanation / Answer

a per unit Fixed cost Variable cost Difference amount/units Shipping expense 20000 8 (6000/750) Mixed Advertising expense 70000 0 Salaries and commission 35000 24 (18000/750) Mixed insurance expense 9000 0 depreciation expense 42000 0 b Per unit Amount Sales revenue 140 525000 Variable expense Cost of goods sold 56 210000 Shipping expense 8 30000 Salaries and commission 24 90000 Contribution margin 52 195000

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