Alden Company has decided to use a contribution format income statement for in

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 of goods sold $20 per unit sold

advertising expense $170000 per quarter

sales commissions 5% of sales

Administrative salaries $80000 per quarter

shipping expense ?

Depreciation expense $50000 per quarter

Management has concluded that shipping expense is a mixed cost containing both variable and fixed cost elements. Units sold and the related shipping expense
over the last eight quarters are given below:

Year 1

First 16000 units sold $160000 shipping expense

second 18000 units sold $175000 shipping expense

third 23000 units sold $217000 shipping expense

fourth 19000 units sold $180000 shipping expense

Year 2

First 17000 units sold $170000 shipping expense

second 20000 units sold $185000 shipping expense

third 25000 units sold $232000 shipping expense

fourth 22000 units sold $208000 shipping expense

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

Using the high-low method estimate a cost formula for shipping expense.

In the first quarter of Year 3 the company plans to sell 21000 units at a selling price of $50 per unit. Prepare a contribution format income statement for
the quarter.