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: Quarter 3 5,120 A$512,000 307,200 204,800 Quarter 4 4,700 A$470,000 282,000 188,000 MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 Sales in units 4,600 4,100 Sales revenue A$460,000 A$410,000 Less: Cost of goods sold 276,000 246,000 Gross margin 184,000 164,000 Less: Operating expenses: Advertising expense 21,100 21,100 Shipping expense 34,400 36,400 Salaries and commissions 78,600 78, 200 Insurance expense 6,100 6,100 Depreciation expense 15,100 15, 100 Total operating expenses 155,300 156,900 Net income A$ 28,700 A$ 7,100 21,100 40,480 90, 440 6,100 15,100 173,220 A$ 31,580 21,100 36, 380 85,580 6,100 15, 100 164, 260 A$ 23,740 (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$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Variable Cost Fixed Cost A$ per unit A$ A$ per unit A$ A$ per unit A$ 2-b. Using the high-low method, state the cost formula for each mixed expense. Y= A$ + A$ Y= A$ + A$ XXX Y= A$ + A$ 3. Redo the company's income statement at the 5,120-unit level of activity using the contribution format. D 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 4,550 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$