Exercise 3: ABC Company is a merchandising company 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: ABC Company Income statement For the three months ended Dec 31, 2008 October November December Sales in units 3,500 units 3000 units 4,000 units S80,000 Sales S690,000 S805,000 3920,000 -Cost of goods sold S60,000 $70,000 Gross margin $630,000 $735,000 $840,000 -Selling and admin exp: freight cost $30,000 $35.000 $40,000 Advertising S10,000 S10,000 $10,000 Insurance 35.000 $5.000 35.000 Salaries and commission $25,000 $28,000 91.000 Depreciation $26.000 $25.000 $25000 Total selling and expense $95.000 S10000 STIIKUU Net income $$35,000 $632.000 $229,000 Required: 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 the mixed expense. 3. Prepare an income statement at the 5,000-unit level of activity using the traditional and contribution format