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: Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 Sales in units 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 Required: July August 8,750 9,250 September 9,750 $ 962,500 577,500 385,000 $ 1,017,500 610,500 407,000 $ 1,072,500 643,500 429,000 31,000 31,000 31,000 120,000 125,800 131,600 160,000 167,900 175,800 6,950 6,950 16,700 334,650 16,700 348,350 6,950 16,700 362,050 $ 50,350 $ 58,650 $ 66,950 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 9,750-unit level of activity using the contribution format.