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 5,500 6,000 September 6,500 Sales in units Sales revenue Less: Cost of goods sold A$ 583,000 A$ 636,000 346,500 378,000 A$ 689,000 409,500 Gross margin 236,500 258,000 279,500 Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 22,500 40,000 87,000 7,500 16,500 22,500 42,000 93,000 7,500 16,500 22,500 43,700 98,700 7,500 16,500 Total operating expenses 173,500 181,500 188,900 Net income A$ 63,000 A$ 76,500 A$ 90,600 (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$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. (Do not round intermediate calculations. Round the "Fixed cost" to the nearest dollar amount and "Variable cost" to 2 decimal places.) Variable Cost Fixed Cost A$ per unit A$ A$ per unit A$ A$ per unit A$ 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.) Y= A$ X + A$ + A$ Y= A$ XIX Y= A$ + A$ 3. Redo the company's income statement at the 6,500-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Income Statement For the Month Ended September 30 Sales in units 6,500 A$ Less: Variable expenses: A$ Less: Fixed expenses: A$