High-low method | Business & Finance homework help


High-Low Method; Assistance format proceeds declaration
Alden assemblage has ruled to use a assistance format proceeds declaration for inner planning purposes.
The assemblage has analyzed its expenditures and has plain the forthcoming consume formulas:
Cost Consume Formula
Cost of goods sold $20 per individual sold
Advertising expenditure $170,000 per district
Sales office 5% of sales
Administrative expenditure 80,000 per district
Shipping expenditure ?
Depreciation expenditure 50,000 per district
Management has concluded that shipping expenditure is a adulterated consume, containing twain unsteady and unroving consume elements.
Units sold and the retaining shipping expenditure balance the ultimate 8 districts are ardent below:
Quarter Units Sold Shipping Expense
Year1:
First 16000 160000
Second 18000 175000
Third 23000 217000
Fourth 19000 180000
Year2:
First 17000 170000
Second 20000 185000
Third 25000 232000
Fourth 22000 208000
Management would approve a consume formula adventitious for shipping expenditure so that a budgeted assistance format proceeds declaration can be cheerful for the present district.
1. Using the high-low regularity, like a consume formula for shipping expenditure.
2. In the highest district of year 3, the assemblage plans to retail 21,000 individuals at the retailing charge of $50 per individual.
Prepare a Assistance Format Proceeds Declaration for the district.