Using the least-squares regression method, calculate a cost formula for shipping expense
Year 1:
Unit sold (x)
First
Second
Third
Fourth
10
16
18
15
Shipping expense (y)
x*y
x^2
119000
1190000
100
175000
2800000
256
190000
3420000
324
164000
2460000
225
Year 2:
First
Second
Third
Fourth
total
mean
b=
(8)(20,556,000)−(120)(1,320,000)
(8)(1884)−(120)2
b = 9000
a = 165,000 – 9000(15)
a = 30,000
Y = 30,000 + 9x
11
17
20
13
120
15
130000
185000
210000
147000
1320000
165000
1430000
3145000
4200000
1911000
20556000
121
289
400
169
1884
In the first quarter of Year 3, the company plans to sell 12,000 units at a selling price of $100 per unit. Prepare a
contribution format income statement for the quarter
Milden Company
Budgeted Income Statement
For the First Quarter of Year 3
Sales
$ 1,200,000
Variable Expenses :
COGS
$ 420,000
Shipping expense
108,000
Sales commission
72,000
Total Variable expenses
(600,000)
Contribution margin
600,000
Fixed expenses :
Shipping expense
30,000
Advertising expense
210,000
Administrative salaries
145,000
Insurance expense
Depreciation expense
Total fixed expenses
Net Operating Income
9,000
76,000
(470,000)
$ 130,000