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 company's income statements for the three most recent months follow: MORRISEY & BROWN, LTD. Income Statements For the Three Months Ending September 30 July August 6,500 September 7,000 6,000 Sales in units Sales revenue Less: Cost of goods sold A$ 648,000 384,000 A$ 702,000 416,000 A$ 756,000 448,000 Gross margin 308,000 264,000 286,000 Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 23,000 42,000 90,000 8,000 17,000 23,000 44,000 96,000 8,000 17,000 23,000 45,600 101,600 8,000 17,000 Total operating expenses 180,000 188,000 195,200 A$ 84,000 AS 98,000 AS 112,800 Net income (Note: Morrisey & Brown, Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by AS.) Required: 1. dentify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Expenses Classification Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Denreciation eynense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. (Do not round intermediate calculations. Round the "Fixed cost" to the nearest dollar amount and "Variable cost" to 2 decimal places.) Variable Cost Fixed Cost AS per unit AS per unit AS per unit A$ A$ v:AS 2-b. Using the high-low method, state the cost formula for each mixed expense. (Do not round intermediate calculations. Round the "X" answers to 2 decimal places.) + A$ Y= A$ Y=AS + A$ + A$ Y= A$ 3. Redo the company's income statement at the 7,000-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Income Statement For the Month Ended September 30 Sales in units 7,000 A$ Less: Variable expenses: Less: Fixed expenses: A$