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 6,400 5,900 7,280 6,500 A$640,000 A$598,800 A$728,000 A$650,000 384,000 354,000 436,800 390,000 256,000 236.000 291,200 260,000 Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total operating expenses Net income 22,900 22,900 22,900 22,900 41,600 43,600 49, 120 43,220 89,400 81,800 98,360 96,020 7,900 7.900 7,900 7.900 16,900 16,900 16,900 16,900 178, 700 173, 100 195, 180 186,940 A$ 77,300 AS 62,900 AS 96,020 A$ 73,860 (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$.) 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Fixed Cost AS AS AS Variable Cost per unit per unit per unit As As AS 2-b. Using the high-low method, state the cost formula for each mixed expense. X Y AS Ye AS Ya AS AS AS AS X 3. Redo the company's income statement at the 7,280-unit level of activity using the contribution format MORRISEY & BROWN, LTD Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units Sales revenue Less: Variable expenses Cost of goods sold Shipping expense Salaries and commissions expense AS AS Oo Contribution margin Less: Fixed expenses Advertising expense Shipping expense Salaries and commissions expense Insurance expense Depreciation expense 0 0 Net income AS 4. Assume that the company's sales are projected to be 5,450 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 Sales revenue Less: Variable expenses Cost of goods sold AS Shipping expense Salaries and commissions expense AS 0 0 Less: Fixed expenses Advertising expense Shipping expense Salaries and commissions expense Insurance expense Depreciation expense 0 Net income AS 0