Morrisey own, Ltd., Sydney is a merchandising company 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 Sales in units 7,750 Sales $ 775,000 Cost of goods sold 465,000 Gross margin 310,000 Selling and administrative expenses: Advertising expense 28,200 Shipping expense 89,500 Salaries and commissions 140,000 Insurance expense 7,200 Depreciation expense 21,600 Total selling and administrative expenses 286,500 Net operating income $ 23,500 August 8,250 $ 825,000 495,000 330,000 September 8,750 $ 875,000 525,000 350,000 28,200 94,500 147,500 7,200 21,600 299,000 $ 31,000 28,200 99,500 155,000 7,200 21,600 311,500 $ 38,500 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 8,750-unit level of activity using the contribution format. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Required 1 Required 2 Required 3 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 per unit Y = + X Morrisey & Brown, Ltd. Income Statement For the Month Ended September 30 Variable expenses: Fixed expenses