Wright State University Operations And Supply Chain Management Assignment Help - Cost Management

Question - Milden Company has an exclusive franchise to purchase a product from the manufacturer and
distribute it on the retail level. As an aid in planning, the company has decided to start using a
contribution format income statement. To have data to prepare such a statement, the company has
analyzed its expenses and has developed the following cost formulas:

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


Milden Company’s president would like a cost formula derived for shipping expense so that a
budgeted contribution format income statement can be prepared for the next quarter.
Req ...Read More uired:
1. Using the least-squares regression method, estimate a cost formula for shipping expense.
(Since the Units Sold above are in thousands of units, the variable cost you compute will also he in
thousands of units. It can be left in this form, or you can convert your variable cost to a per unit basis
by dividing it by 1,000.)
2. 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 thequarter. ...Read Less

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