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:

1. Identify each of the companys expenses (including cost of goods sold) as being variable, fixed, or mixed.

MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 Sales in units 5,400 4,900 Sales revenue A$540,000 $490,000 Less: Cost of goods sold 324,000 294,000 Gross margin 216,000 196,000 Less: Operating expenses: Advertising expense 21,900 21,900 Shipping expense 37,600 39,600 Salaries and commissions 83,400 79,800 Insurance expense 6,900 6,900 Depreciation expense 15,900 15,900 Total operating expenses 165,700 164, 100 Net income A$ 50,300 A$ 31,900 Quarter 3 6,080 A$608,000 364,800 243,200 Quarter 4 5,500 A$550,000 330,000 220,000 21,900 44,320 93,960 6,900 15,900 182,980 A$ 60,220 21,900 39,420 90,220 6,900 15,900 174,340 A$ 45,660 (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$.) Expenses Classification Variable Cost of goods sold Advertising expense Shipping expense Fixed Mixed Salaries and commissions Mixed Insurance expense Fixed Depreciation expense Fixed 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Variable Cost Fixed Cost A$ per unit 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$ X X X Y= A$ + A$