Morrisey & Brown, Limited, of Sydney 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: Sales in units Sales Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 July August 5,250 $630,000 Cost of goods sold 378,000 5,750 $690,000 414,000 September 6,250 $750,000 Gross margin 252,000 276,000 450,000 300,000 Selling and administrative, expenses: Advertising expense 30,600 30,600 30,600 Shipping expense 46,500 49,500 52,500 Salaries and commissions 93,000 99,500 106,000 Insurance expense 10,200 10,200 10,200 Depreciation expense 21,300 21,300 21,300 Total selling and administrative expenses 201,600 211,100 220,600 $ 50,400 $ 64,900 $ 79,400 Net operating income Required: 1. By analyzing the data from the company's income statements, classify each of its 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. Express the variable and fixed portions of each mixed expense in the form Y=a+bX. 3. Redo the company's income statement at the 6,250-unit level of activity using the contribution format.