2-a. Using the high-low method, separate each mixed expense into variable and fixed eleme Advertising expense Shipping expense Salaries and commissions expense ..... Advertising expense A$ AS AS Variable Cost per unit per unit per unit Y= A$ Y= A$ Y= A$ A$ A$ A$ 2-b. Using the high-low method, state the cost formula for each mixed expense. EMPRE MARTED Fixed Cost 22,600+ A$ +AS + A$ 22,600 XXX

Financial And Managerial Accounting
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Chapter21: Variable Costing For Management analysis
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Smith & Chief Ltd. of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity
among Australian consumers. The company's income statements for the four most recent quarters follow.
SMITH & CHIEF LTD.
Income Statements
For the Four Quarters Ending December 31
Quarter 1 Quarter 2
6,100
5.600
A$610,000 A$560,080 A$692,000
366,000 336,000
415,280
244,800 224,800
276,800
Sales in units
Sales revenue
Less: Cost of goods sold
Gross margin
Less: Operating expenses:
Advertising expense
Shipping expense
Salaries and commissions
Insurance expense
Depreciation expense
Total operating expenses
Net income
Advertising expense
Shipping expense
Salaries and commissions expense
(Note: Smith & Chief Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian
dollar is denoted by A$.)
S
Advertising expense
22,600
22,600
22,600
40,408
42.400
42,080
87,600
81,200
97,840
94,288
7,500
7,600
7,600
7,600
16,600
16,600
16,600
16,600
174,800 170,480
191,520
183,160
A$ 69,200 A$ 53,600 A$ 85,280 A$ 68,840
AS
AS
2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.
1994
Vartable Cost
Quarter 3
6,920
C
MEAS
Y=AS
Y= A$
22,600
47,680
per unit
per unit
per unit
Quarter 4
6,300
A$630,000
378,000
252,000
AS
AS
45
Caleanke
22,600 AS
AS
+AS
2-b. Using the high-low method, state the cost formula for each mixed expense.
Fixed Cost
22,600
XXX
Transcribed Image Text:Smith & Chief Ltd. of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company's income statements for the four most recent quarters follow. SMITH & CHIEF LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 6,100 5.600 A$610,000 A$560,080 A$692,000 366,000 336,000 415,280 244,800 224,800 276,800 Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total operating expenses Net income Advertising expense Shipping expense Salaries and commissions expense (Note: Smith & Chief Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.) S Advertising expense 22,600 22,600 22,600 40,408 42.400 42,080 87,600 81,200 97,840 94,288 7,500 7,600 7,600 7,600 16,600 16,600 16,600 16,600 174,800 170,480 191,520 183,160 A$ 69,200 A$ 53,600 A$ 85,280 A$ 68,840 AS AS 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. 1994 Vartable Cost Quarter 3 6,920 C MEAS Y=AS Y= A$ 22,600 47,680 per unit per unit per unit Quarter 4 6,300 A$630,000 378,000 252,000 AS AS 45 Caleanke 22,600 AS AS +AS 2-b. Using the high-low method, state the cost formula for each mixed expense. Fixed Cost 22,600 XXX
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