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Problem 6-4 Examining Cost Behaviour; High-Low Analysis; Contribution Margin Income Statement (LO1 - CC1, 3, 6; LO2-CC9; LO3 - CC12) Morrisey & Brown, Ltd., of
Problem 6-4 Examining Cost Behaviour; High-Low Analysis; Contribution Margin Income Statement (LO1 - CC1, 3, 6; LO2-CC9; LO3 - CC12) 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: Quarter 3 5,840 A$584,000 350,400 233,600 Quarter 4 5,300 A$530,000 318,000 212,000 MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 Sales in units 5,200 4,700 Sales revenue A$520,000 A$470,000 Less: Cost of goods sold 312,000 282,000 Gross margin 208,000 188,000 Less: Operating expenses: Advertising expense 21,700 21,700 Shipping expense 36,800 38,800 Salaries and commissions 82,200 79,400 Insurance expense 6,700 6,700 Depreciation expense 15,700 15,700 Total operating expenses 163, 100 162,300 Net income A$ 44,900 A$ 25,700 21,700 43,360 93,080 6,700 15,700 180,540 A$ 53,060 21,700 38,660 89,060 6,700 15,700 171,820 A$ 40, 180 (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
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