Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The companys income statements for the three most recent months follow:

MORRISEY & BROWN, LTD. Income Statements
For the Four Quarters Ending December 31
	Quarter 1			Quarter 2			Quarter 3			Quarter 4
Sales in units		5,800			5,300			6,560			5,900
Sales revenue	A$	580,000		A$	530,000		A$	656,000		A$	590,000
Less: Cost of goods sold		348,000			318,000			393,600			354,000
Gross margin		232,000			212,000			262,400			236,000
Less: Operating expenses:
Advertising expense		22,300			22,300			22,300			22,300
Shipping expense		39,200			41,200			46,240			40,940
Salaries and commissions		85,800			80,600			95,720			92,540
Insurance expense		7,300			7,300			7,300			7,300
Depreciation expense		16,300			16,300			16,300			16,300
Total operating expenses		170,900			167,700			187,860			179,380
Net income	A$	61,100		A$	44,300		A$	74,540		A$	56,620

(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 companys expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 6,560-unit level of activity using the contribution format.

4. Assume that the companys sales are projected to be 5,150 units in the next quarter. Prepare a contribution margin income statement.