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 Quarter 3 Quarter 4 Sales in units 5, 100 4,600 5,720 5,200 Sales revenue A$510,000 A$ 460,000 A$ 572,000 A$520,000 Less: Cost of goods sold 306,000 276,000 343, 200 312,000 Gross margin 204,000 184,000 228,800 208,000 Less: Operating expenses: Advertising expense 21,600 21,600 21,600 21,600 Shipping expense 36,400 38,400 42,880 38,280 Salaries and commissions 81,600 79,200 92,640 88,480 Insurance expense 6,600 6,600 6,600 6,600 Depreciation expense 15,600 15,600 15,600 15,600 Total operating expenses 161,800 161,400 179,320 170,560 Net income A$ 42,200 A$ 22,600 A$ 49,480 A$ 37,440 (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 X XX 3. Redo the company's income statement at the 5,720-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 4,800 units in the next quarter. Prepare a contribution margin income statement MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units A$ Less: Variable expenses: A$ Less: Fixed expenses: A$