Express the cost of goods sold and the selling expenses in terms of cost equations.
| Gallop Corporation prepared the following report for the first quarter of this year: |
| Sales (2,400 units @ $2,700 per unit) | $ | 6,480,000 | ||
| Less: Cost of goods sold | 3,232,000 | |||
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| Gross margin | 3,248,000 | |||
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| Selling expenses | $ | 1,044,000 | ||
| Administrative expenses | 1,040,000 | 2,084,000 | ||
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| Income | $ | 1,164,000 | ||
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| Gallop’s controller, Nancy Johnstone, studied the costs in detail, particularly focusing on cost behaviour. |
| Her analysis revealed the following: | |
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Sixty percent of the cost of goods sold was variable with respect to the number of units. |
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Of the selling expenses, $810,000 was fixed; the remaining was variable with respect to the number of units. |
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All of the administrative expenses were fixed. |
| Required: | |
| 1. | Express the cost of goods sold and the selling expenses in terms of cost equations. (Round the “Variable cost” to 2 decimal places.) |
