2A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement [LO2-10] Morrisey & Brown, Limited, of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The companys income statements for the three most recent months follow: Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 July August September Sales in units 4,750 5,250 5,750 Sales $ 546,250 $ 603,750 $ 661,250 Cost of goods sold 327,750 362,250 396,750 Gross margin 218,500 241,500 264,500 Selling and administrative expenses: Advertising expense 31,800 31,800 31,800 Shipping expense 35,500 38,100 40,700 Salaries and commissions 81,000 87,300 93,600 Insurance expense 6,550 6,550 6,550 Depreciation expense 18,000 18,000 18,000 Total selling and administrative expenses 172,850 181,750 190,650 Net operating income $ 45,650 $ 59,750 $ 73,850 Required: 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. 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. Redo the companys income statement at the 5,750-unit level of activity using the contribution format