Question

The Central Valley Company is a merchandising firm that sells a single product. The company's revenues and expenses for the last three months are given below:

	April		May		June
Sales in units .................................	4,500		5,250		6,000
Sales revenue ...............................	$630,000		$735,000		$840,000
Less cost of goods sold ………..........	252,000		294,000		336,000
Gross Margin ................................	378,000		441,000		504,000
Less operating expenses:
Shipping expense ………..............	56,000		63,500		71,000
Advertising expense ………..........	70,000		70,000		70,000
Salaries and commissions ..........	143,000		161,750		180,500
Insurance expense ....................	9,000		9,000		9,000
Depreciation expense ...............	42,000		42,000		42,000
Total operating expenses ……..	320,000		346,250		372,500
Net income .......................	$58,000		$94,750		$131,500

Required:

Determine which expenses are mixed (show computations) and, by use of the high-low method, separate each mixed expense into its variable and fixed components. State the cost formula for each mixed expense.

Compute the company's total contribution margin (Sales – Variable Costs) for May.