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 companys income statements for the three most recent months follow:

Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30
	July				August				September
Sales in units		8,250				8,750				9,250
Sales	$	783,750			$	831,250			$	878,750
Cost of goods sold		470,250				498,750				527,250
Gross margin		313,500				332,500				351,500
Selling and administrative expenses:
Advertising expense		25,400				25,400				25,400
Shipping expense		102,500				107,900				113,300
Salaries and commissions		150,000				157,700				165,400
Insurance expense		7,350				7,350				7,350
Depreciation expense		21,400				21,400				21,400
Total selling and administrative expenses		306,650				319,750				332,850
Net operating income	$	6,850			$	12,750			$	18,650

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 companys income statement at the 9,250-unit level of activity using the contribution format.