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Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian
Morrisey & Brown, Ltd., of Sydney is a merchandising company 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 Three Months Ended September 30 July August Sales in units 8,750 9,250 Sales $ 962,500 $1,017,500 Cost of goods sold 577,500 610,500 Gross margin 385,000 407,000 Selling and administrative expenses : Advertising expense 31,000 31,000 Shipping expense 120,000 125,800 Salaries and commissions 160,000 167,900 Insurance expense 6,950 6,950 Depreciation expense 16,700 16,700 Total selling and administrative expenses 334,650 348,350 Net operating income $ 50,350 $ 58,650 September 9,750 $1,072,500 643,500 429,000 31,000 131,600 175, 800 6,950 16,700 362,050 66,950 $ Required: 1. By analyzing the data from the company's income statements, classify each of its expenses (including cost of goods sold) as either variable, fixed, or mixed. 2. Using the high-low method, separate each mixed expense into variable and fixed elements. Express the variable and fixed portions of each mixed expense in the form Y = a + bx. 3. Redo the company's income statement at the 9,750-unit level of activity using the contribution format. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 By analyzing the data from the company's income statements, classify each of its expenses (including cost of goods sold) as either variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Using the high-low method, separate each mixed expense into variable and fixed elements. Express the variable and fixed portions of each mixed expense in the form Y = a + bx. (Round the Variable cost per unit to 1 decimal place.) Variable Cost Fixed Cost Formula per unit Y = |x |x per unit Y = + Redo the company's income statement at the 9,750-unit level of activity using the contribution format. Morrisey & Brown, Ltd. Income Statement For the Month Ended September 30 Variable expenses: Fixed expenses
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