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 5,900 5,400 6,680 6,000 Sales revenue A$590,000 A$540,000 A$668,000 A$ 600,000 Less: Cost of goods sold 354,000 324,000 400, 800 360,000 Gross margin 236,000 216,000 267,200 240,000 Less: Operating expenses: Advertising expense 22,400 22,400 22,400 22,400 Shipping expense 39,600 41,600 46,720 41,320 Salaries and commissions 86,400 80,800 96,160 93,120 Insurance expense 7,400 7,400 7,400 7,400 Depreciation expense 16,400 16,400 16,400 16,400 Total operating expenses 172,200 189,080 180,640 Net income A$ 63,800 A$ 47,400 A$ 78,120 A$ 59, 360 168,600 (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$ 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$ XXX 3. Redo the company's income statement at the 6,680-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 5,200 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$