Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas:...

Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost of good sold Advertising expense Sales commissions Shipping expense Administrative salaries Insurance expense Depreciation expense Cost Formula $31 per unit sold $181,000 per quarter 6% of sales 2 $91,000 per quarter $10,100 per quarter $61,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Units Sold Quarter Year 1: First Second LE Third Fourth * Year 2: First Second Third Fourth 27,000 29,000 34,000 30,000 $ 171,000 $ 186,000 $ 228,000 $ 191,000 28,000 31,000 45,000 42,000 $ 181,000 $ 196,000 $ 243,000 $ 219,000 Required: 1. Using the high-low method, estimate a cost formula for shipping expense in the form Y = a +bX. 2. In the first quarter of Year 3, the company plans to sell 37,000 units at a selling price of $61 per unit. Prepare a contribution format income statement for the quarter.