Gallop Corporation prepared the following report for the first quarter of this year:
Sales @ $ per unit $
Less: Cost of goods sold
Gross margin
Less:
Selling expenses $
Administrative expenses
Income $
Gallops controller, Nancy Johnstone, studied the costs in detail, particularly focusing on cost behaviour. Her analysis revealed the following:
Fixed portion of the cost of goods sold for the quarter amounted to $
Of the selling expenses, was variable with respect to the number of units.
All of the administrative expenses were fixed.
Required:
Express the cost of goods sold and the selling expenses in terms of cost equations. Round the "Variable cost" to decimal places.
Redo and prepare the above income statement using a contribution margin approach. Do not round intermediate calculations.
