es Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company's income statements for the three most recent months follow: Sales in units Sales revenue MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 6,200 5,700 7,040 Less: Cost of goods sold Gross margin A$620,000 A$570,000 A$704,000 372,000 342,000 422,400 248,000 228,000 6,300 A$630,000 378,000 281,600 252,000 Less: Operating expenses: Advertising expense 22,700 22,700 22,700 22,700 Shipping expense 40,800 42,800 48,160 42,460 Salaries and commissions 88,200 81,400 97,480 94,860 Insurance expense 7,700 7,700 71700 7,700 Depreciation expense 16,700) 16,700 16,700 16,700 Total operating expenses 176,100 171,300 192,740 184,420 Net income A$ 71,900 A$ 56,700 A$ 88,860 A$ 67,580 (Note: Morrisey & Brown, Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Expenses Cost of goods sold Advertising expense Classification Shipping expense Salaries and commissions Insurance expense Depreciation expense S 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Variable Cost Fixed Cost A$ per unit A$ A$ per unit A$ A$ per unit A$ 2-b. Using the high-low method, state the cost formula for each mixed expense. Y= A$ + A$ X Y= A$ + A$ X Y= A$ +AS X 3. Redo the company's income statement at the 7,040-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units Less: Variable expenses: Less: Fixed expenses: A$ A$ A$ 4. Assume that the company's sales are projected to be 5,350 units in the next quarter. Prepare a contribution margin inco statement. MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units Less: Variable expenses: Less: Fixed expenses: A$ A$ A$ +