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: August 5,000 $ 550,000 330,000 220,000 September 5,500 $ 605,000 363,000 242,000 Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 July Sales in units 4,500 Sales $ 495,000 Cost of goods sold 297,000 Gross margin 198,000 Selling and administrative expenses: Advertising expense 30,600 Shipping expense 35,000 Salaries and commissions 80,000 Insurance expense 9,950 Depreciation expense 21,800 Total selling and administrative expenses 177,350 Net operating income $ 20,650 30,600 37,400 86,200 9,950 21,800 185,950 34,050 30,600 39,800 92,400 9,950 21,800 194,550 $ 47,450 $ 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 5,500-unit level of activity using the contribution format