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: Sales in units Sales revenue MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Less: Cost of goods sold Gross margin Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total operating expenses Net income Quarter 1 Quarter 2 5,200 4,700 Quarter 3 Quarter 4 5,840 5,300 A$520,000 A$470,000 A$584,000 A$530,000 312,000 282,000 350,400 318,000 208,000 188,000 233,600 212,000 21,700 21,700 21,700 21,700 36,800 38,800 43,360 38,660 82,200 79,400 93,080 89,060 6,700 6,700 6,700 6,700 15,700 163,100 15,700 162,300 15,700 15,700 180,540 171,820 A$ 40,180 A$ 44,900 A$ 25,700 A$ 53,060 (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$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Expenses Classification Cost of goods sold Variable Advertising expense Fixed Shipping expense Mixed Salaries and commissions Mixed Insurance expense Fixed Depreciation expense Fixed 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Fixed Cost Variable Cost A$ 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. Y=A$ + A$ Y= A$ + A$ Y= A$ + A$ X 3. Redo the company's income statement at the 5,840-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units Less: Variable expenses: Less: Fixed expenses: A$ A$ A$ 4. Assume that the company's sales are projected to be 4,850 units in the next quarter. Prepare a contribution margin income statement. Sales in units MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Less: Variable expenses: Less: Fixed expenses: A$ A$ A$