Exercise 5: Morrisey & Brown, Ltd. merchandising company is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses for the last three months are given below: July August September Sales in units 4,000 4,500 5,000 Sales revenue $400,000 $450,000 $500,000 Cost of goods sold.. 240,000 270,000 300,000 Gross margin $160,000 $180,000 $200,000 Selling and administrative expenses: Advertising expense 21,000 21,000 21,000 Shipping expense 34,000 36,000 38,000 Salaries and commissions 78,000 84,000 90,000 Insurance expense. 6,000 6,000 6,000 Depreciation expense. 15,000 15,000 15,000 Total selling and administrative expenses 154,000 162,000 170,000 Net operating income (loss) $6,000 $18,000 $30,000 Required: 1) Identify each of the company's expenses (including cost of goods sold) as 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. 3) Prepare the company's income statement at the 5,000-unit level of activity using the contribution format