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Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm 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 Four Quarters Ending December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales in units 6,100 5,600 6,920 6,200 Sales revenue A$610,000 A$560,000 A$692,000 A$620,000 Less: Cost of goods sold 366,000 336,000 415,200 372,000 Gross margin 244,000 224,000 276,800 248,000 Less: Operating expenses: Advertising expense 22,600 22,600 22,600 22,600 Shipping expense 40,400 42,400 47,680 42,080 Salaries and commissions 87,600 81,200 97,040 94,280 Insurance expense 7,600 7,600 7,600 7,600 Depreciation expense 16,600 16,600 16,600 16,600 Total operating expenses 174,800 170,400 191,520 183,160 Net income A$ 69,200 A$ 53,600 A$ 85,280 A$ 64,840 (Note: Morrisey & Brown, Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. Variable Cost Fixed Cost A$ per unit A$ A$ per unit A$ A$ A$ per unit 2-b. Using the high-low method, state the cost formula for each mixed expense. Y= A$ + A$ Y= A$ + A$ XXX Y= A$ + A$ 3. Redo the company's income statement at the 6,920-unit level of activity using the contribution format. MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units A$ Less: Variable expenses: A$ Less: Fixed expenses: A$ 4. Assume that the company's sales are projected to be 5,300 units in the next quarter. Prepare a contribution margin income statement. MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units A$ Less: Variable expenses: A$ Less: Fixed expenses: A$