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MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 5,600 5, 100 A$ 560,000 A$ 510,000 336,000
MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 5,600 5, 100 A$ 560,000 A$ 510,000 336,000 306, 000 224,000 204,000 Quarter 3 6, 320 A$ 632,000 379,200 252, 800 Quarter 4 5, 700 A$ 570,000 342,000 228,000 Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses: Advertising expense Shipping expense Salaries and comissions Insurance expense Depreciation expense Total operating expenses Net income 22, 100 22, 100 38, 400 40, 400 84, 600 80, 200 7, 100 7, 100 16, 100 16, 100 168, 300 165, 900 A$ 55,700 A$ 38, 100 22, 100 45, 280 94, 840 7, 100 16, 100 185, 420 A$ 67, 380 22, 100 40, 180 91, 380 7, 100 16, 100 176, 860 A$ 51, 140 (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$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Fixed Cost A$ A$ Variable Cost per unit per unit per unit A$ A$ A$ 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$ + A$ X 3. Redo the company's income statement at the 6,320-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units AS Less: Variable expenses AS Less: Fixed expenses AS 4. Assume that the company's sales are projected to be 5,050 units in the next quarter. Prepare a contribution margin income statement. MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units AS Less: Variable expenses AS Less: Fixed expenses: AS
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