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1. Identify each of the company s expenses (including cost of goods sold) as either variable fixed or mixed. 2. Using the high-low method separate
1. Identify each of the company s expenses (including cost of goods sold) as either variable fixed or mixed.
2. Using the high-low method separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense.
Sales in units Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 July Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses Net operating income 4,000 $400,000 240,000 160,000 21,000 34,000 78,000 6,000 15,000 154,000 $ 6,000 August 4,500 $450,000 270,000 180,000 21,000 36,000 84,000 6,000 15,000 162,000 $ 18,000 September 5,000 $500,000 300,000 200,000 21,000 38,000 90,000 6,000 15,000 170,000 $ 30,000
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