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Per unt basis PROBLEM [L01, L03, LO4] Morrisey & Brown. Ltd., of Sydney is a merchandising company that is the sole distributor 3-12 Cost Behavior:
Per unt basis PROBLEM [L01, L03, LO4] Morrisey & Brown. Ltd., of Sydney is a merchandising company that is the sole distributor 3-12 Cost Behavior: High-Low Method; Contribution Format Income Statement uct that is increasing in popularity among Australian consumers. The company's incom ments for the three most recent months follow: Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 September 5,000 A$500,000 300,000 200,000 July August 4,500 A$450,000 270,000 180,000 4,000 Sales revenue... . Cost of goods sold. Gross margin. .. Selling and administrative expenses: A$400,000 240,000 160,000 21,000 34,000 78,000 6,000 15,000 154,000 AS 6,000 21,000 36,000 84,000 6,000 15,000 162,000 A$ 18,000 21,000 38,000 90,000 6,000 15,000 170,000 A$ 30,000 Advertising expense Shipping expense.... Salaries and commissions . . Insurance expense. Total selling and administrative expenses Net operating income. . (Note: Morrisey & Brown, Ltd.'s Australian-formatted income statement has been recast in the format common in the United States. The Australian dollar is denoted here by AS.) Required ify each of the company's expenses (including cost of goods sold) as either variabie 2. Using the high-low method, separate each mixed expense i 3. Redo the company's income statement at the 5,000-unit level of activity using the con fixed, or mixed. State the cost formula for each mixed expense. format nto variable and fixed elements. tribution
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