Problem 2A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement (LO2-10] 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: Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 July August September Sales in units 6,250 6,750 7,250 Sales $ 656,250 $ 788,75e $ 761,250 Cost of goods sold 393,750 425,250 456,75e Gross margin 262,50 283,500 304,5ee Selling and administrative expenses : Advertising expense 36,600 36,600 36,600 Shipping expense 62,5ee 66, 30e 70, iee Salaries and commissions 115,000 121,900 128,800 Insurance expense 9,100 9,100 9,10e Depreciation expense 16,90 16,900 16,900 Total selling and administrative expenses 240, 100 250.800 261, see Net operating income $ 22,400 $ 32,700 $ 43,000 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 7,250-unit level of activity using the contribution format Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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. Expenses Classification Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Required 2 > Problem 2A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement (LO2-10] 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: Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 July August September Sales in units 6,250 6,750 7,250 Sales $ 656,250 $ 788,75e $ 761,250 Cost of goods sold 393,750 425,250 456,75e Gross margin 262,50 283,500 304,5ee Selling and administrative expenses : Advertising expense 36,600 36,600 36,600 Shipping expense 62,5ee 66, 30e 70, iee Salaries and commissions 115,000 121,900 128,800 Insurance expense 9,100 9,100 9,10e Depreciation expense 16,90 16,900 16,900 Total selling and administrative expenses 240, 100 250.800 261, see Net operating income $ 22,400 $ 32,700 $ 43,000 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 7,250-unit level of activity using the contribution format Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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. Expenses Classification Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Required 2 >
