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 companys 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		5,000			4,500			5,600			5,100
Sales revenue	A$	500,000		A$	450,000		A$	560,000		A$	510,000
Less: Cost of goods sold		300,000			270,000			336,000			306,000
Gross margin		200,000			180,000			224,000			204,000
Less: Operating expenses:
Advertising expense		21,500			21,500			21,500			21,500
Shipping expense		36,000			38,000			42,400			37,900
Salaries and commissions		81,000			79,000			92,200			87,900
Insurance expense		6,500			6,500			6,500			6,500
Depreciation expense		15,500			15,500			15,500			15,500
Total operating expenses		160,500			160,500			178,100			169,300
Net income	A$	39,500		A$	19,500		A$	45,900		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 companys expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 5,600-unit level of activity using the contribution format.

4. Assume that the companys sales are projected to be 4,750 units in the next quarter. Prepare a contribution margin income statement.