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 5,000 4,500 Sales revenue A$500,000 A$450,000 Less: Cost of goods sold 300,000 270,000 Gross margin 200,000 180,000 Less: Operating expenses: Advertising expense 21,500 21,500 Shipping expense 36,000 38,000 Salaries and commissions 81,000 79,000 Insurance expense 6,500 6,500 Depreciation expense 15,500 15,500 Total operating expenses 160,500 160,500 Net income A$ 39,500 A$ 19,500 Quarter 3 5,600 A$560,000 336,000 224,000 Quarter 4 5,100 A$510,000 306,000 204,000 21,500 42,400 92,200 6,500 15,500 178, 100 A$ 45,900 21,500 37,900 87,900 6,500 15,500 169,300 A$ 34,700 (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$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Variable Expenses Cost of goods sold Advertising expense Shipping expense Fixed Mixed Mixed Salaries and commissions Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Variable Fixed Mixed Mixed Salaries and commissions Fixed Insurance expense Depreciation expense Fixed 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Variable Cost Fixed Cost A$ per unit Shipping expense Cost of goods sold AS AS A$ per unit Insurance expense A$ per unit AS 2-b. Using the high-low method, state the cost formula for each mixed expense. Y= A$ + A$ Y= A$ + A$ X X X Y= A$ + A$ 3. Redo the company's income statement at the 5,600-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 AS 0 0 Less: Fixed expenses 0 A$ 0 4. Assume that the company's sales are projected to be 4,750 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: AS 0 0 Less: Fixed expenses: 0 A$ 0