Question 2 Frankel Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The company's revenues and expenses (in British pounds) for the last three months are given below: 3.000 Frankel Ltd. Comparative Income Statements For the Three Months Ended June 30 April May June Sales in units 3.750 4,500 Sales revenue 420.000 525,000 630,000 Cost of goods sold 168.000 210,000 252.000 Gross margin 252.000 315.000 378,000 Selling and administrative expenses: Shipping expense 44,000 50,000 56,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 107.000 125,000 143,000 Insurance expense 9.000 9.000 9,000 Depreciation expense 42.000 42.000 42,000 Total selling and administrative expenses 272.000 296,000 320,000 Net operating income (loss). 120.000 19.000 58,000 (Note: Frankel Lid's income statement has been recast in the functional format common in the United States. The British currency is the pound, denoted by ) Required: 1. Identify each of the company's 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. State the cost formula for each mixed expense. 3. Redo the company's income statement at the 4,500-unit level of activity using the contribution format