Problem 5A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement (LO5-10] 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 Sales in units 7,000 Sales $ 735,000 Cost of goods sold 441,000 Gross margin 294,000 Selling and administrative expenses: Advertising expense 36,400 Shipping expense 75,000 Salaries and commissions 120,000 Insurance expense 8,400 Depreciation expense 22,800 Total selling and administrative expenses 262,600 Net operating income $ 31,400 August 7,500 $ 787,500 472,500 315,000 September 8,000 $ 840,000 504,000 336,000 36,400 79,400 127,200 8,400 22,800 274,200 $ 40,800 36,400 83,800 134,400 8,400 22,800 285,800 $ 50,200 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 8,000-unit level of activity using the contribution format. 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 8,000-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 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. (Round the Variable cost per unit to 1 decimal place.) Variable Cost Formula $ 8.8 per unit Shipping expense Salaries and commissions expense Fixed Cost $ 23,800 Y = Y = x $ 14.4 per unit X Required 1 Required 2 Required 3 Redo the company's income statement at the 8,000-unit level of activity using the contribution format. Morrisey & Brown, Ltd. Income Statement For the Month Ended September 30 Variable expenses: 0 0 Fixed expenses: 0 $ 0