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 Four Quarters Ending December 31 Quarter 1 Quarter 2 Sales in units 6,000 5,500 Sales revenue A$ 600,000 A$ 550,000 Less: Cost of goods sold 360,000 330,000 Gross margin 240,000 220,000 Less: Operating expenses: Advertising expense 22,500 22, 500 Shipping expense 40,000 42,000 Salaries and commissions 87,000 81,000 Insurance expense 7,500 7,500 Depreciation expense 16,500 16,500 Total operating expenses 173, 500 169,500 Net income A$ 66,500 A$ 50, 500 Quarter 3 6, 800 A$ 680,000 408,000 272,000 Quarter 4 6,100 A$ 610,000 366,000 244,000 22,500 47,200 96, 600 7,500 16,500 190, 300 A$ 81, 700 22,500 41,700 93, 700 7,500 16,500 181, 900 A$ 62, 100 (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$ A$ Variable Cost per unit per unit per unit A$ A$ A$ 2-b. Using the high-low method, state the cost formula for each mixed expense. Y= A$ Y= A$ Y= A$ + A$ + A$ + A$ X 3. Redo the company's income statement at the 6,800-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units A$ Less: Variable expenses: A$ Less: Fixed expenses: A$ 4. Assume that the company's sales are projected to be 5,250 units in the next quarter. Prepare a contribution margin inco statement. MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units AS Less: Variable expenses: A$ Less: Fixed expenses: A$