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 Morrisey & Brown, Itd. Income Statements For the Three Monthu Ended september 30 July August September Sales in units 7.500 8,000 8,500 Sales $ 712,500 $760,000 5 807,500 Cout of goods sold 427,500 456,000 484,500 Gross margin 285,000 304,000 323,000 Selling and administrative expenses Advertising expense 39,600 39,600 39,600 Shipping expense 81,000 85,800 90,600 Salaries and commissions 135,000 142,400 149,800 Insurance expense 6,100 6,100 6,100 Depreciation expense 19,300 19,300 19,300 Total selling and administrative expenses 281.000 293,200 305,400 Het operating income $ 4.000 $ 10,800 $ 17,600 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 8,500-unit level of activity using the contribution format Required 1 Required 2 Required 3 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. Classification Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 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 Ya+bX (Round the Variable cost per unit to 1 decimal place) Variable Cost Fixed cost Formula per unit per unit Required 1 Required 2 Required 3 Redo the company's income statement at the 8,500-unit level of activity using the contribution format. Morriney & Brown, Ltd. Income Statement For the Month Ended September 30 Variable expenses Fixed expenses