Maryland Novelties Company Produces and Sells Souvenir Products Required:
1)Identify the Mixed Expense(s)

Essay

Maryland Novelties Company produces and sells souvenir products.Monthly income statements for two activity levels are provided below: $\begin{array}{c}\begin{array}{|l|}\hline \text {Unit volumes}\\\hline \text {Revenue}\\\hline \text {Less cost of goods sold}\\\hline \text {Gross margin}\\\hline \text {Less operating expenses}\\\hline \text {Salaries and commissions}\\\hline \text {Advertising expenses}\\\hline \text {Administrative expenses}\\\hline \text {Total operating expenses}\\\hline \text {Net income}\\\hline \end{array}\begin{array}{l}\hline20,000 \text { units }\\\hline\$ 150,000 \\\hline 60,000 \\\hline \$ 90,000 \\\hline\\\hline 20,000 \\\hline 30,000 \\\hline 12,500 \\\hline \$ 2,500 \\\hline \$ \quad 27,500 \\\hline \end{array}\begin{array}{|l|}\hline30,000 \text { units }\\\hline \$225,000\\\hline90,000\\\hline135,000\\\hline\\\hline 25,000 \\\hline 30,000 \\\hline 12,500 \\\hline 67,500 \\\hline \$ 67,500 \\\hline \end{array}\end{array}$
Required:
1)Identify the mixed expense(s).
2)Use the high-low method to separate the mixed costs into variable and fixed components.
3)Prepare a contribution margin income statement at the 20,000-unit level.