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: Sales in units. Sales Morrisey & Brown, Ltd. Income Statements. For the Three Months Ended September 30 July August September 6,000 6,500 7,000 $570,000 $ 617,500 $ 665,000 Cost of goods sold 342,000 370,500 399,000 Gross margin 228,000 247,000 266,000 Selling and administrative expenses: Advertising expense 26,200 26,200 26,200 Shipping expense 58,000 61,600 65,200 Salaries and commissions 110,000 116,800 123,600 Insurance expense. 8,450 8,450 8,450 Depreciation expense 17,900 17,900 Total selling and administrative expenses 220,550 230,950 17,900 241,350 Net operating income $ 7,450 $ 16,050 $ 24,650 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 7,000-unit level of activity using the contribution format.