Problem 5A-7 Cost Behavior; High-Low Method; Contribution Format Income Statement (L05-10] 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: August 5,500 $687,500 412,500 275,000 September 6,000 $750,000 450,000 300,000 Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 July Sales in units 5,000 Sales $625,000 Cost of goods sold 375,000 Gross margin 250,000 Selling and administrative expenses: Advertising expense 22,800 Shipping expense 46,000 Salaries and commissions 92,000 Insurance expense 6,050 Depreciation expense 24,700 Total selling and administrative expenses 191,550 Net operating income $ 58,450 22,800 48,800 98,400 6,050 24,700 200, 750 $ 74,250 22,800 51,600 104,800 6,050 24,700 209,950 $ 90,050 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 6,000-unit level of activity using the contribution format