(Appendix 3A)The Accounting Department of Archer Company,a Merchandising Company,has Prepared

Essay

(Appendix 3A)The Accounting Department of Archer Company,a merchandising company,has prepared the following analysis:
The Accounting Department feels that billing expense is a mixed cost,containing both fixed and variable cost elements.A tabulation has been made of billing expense and sales in units over the last several months,as follows:
The Accounting Department now plans to develop a cost formula for billing expense so that a contribution-type income statement can be prepared for management's use.
Required:
a.Using the least-squares regression method and the equations for a and b,estimate the cost formula for billing expense.
b.Assume that the company plans to sell 30,000 units during July at a selling price of $100 per unit.Prepare a budgeted income statement for the month,using the contribution format.