Problem 6-4 Examining Cost Behaviour; High-Low Analysis; Contribution Margin Income Statement (LO1 CC1, 3, 6; LO2 CC9; LO3 - CC12) Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm 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 Ending September 30 July August September 6,000 Sales in units 5,000 5,500 Sales revenue A$ 520,000 310,000 A$ 572,000 341,000 A$ 624,000 372,000 Less: Cost of goods sold Gross margin Less: Operating expenses 210,000 231,000 252,000 Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 22,000 38,000 84,000 7,000 16,000 22,000 40,000 90,000 7,000 16,000 22,000 41,800 95,800 7,000 16,000 Total operating expenses 167,000 175,000 182,600 Net income A$ 43,000 AS 56,000 AS 69,400 (Note: Morrisey & Brown, Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by AS.) Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or Expenses Classification Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 2-a. Using the high-low method, separate each mixed expense into variable and fixed elements. (Do not round intermediate calculations. Round the "Fixed cost" to the nearest dollar amount and Variable cost" to 2 decimal places.) A$ A$S AS Variable CostFixed Cost per unit A$ per unit AS per unt AS 2-b. Using the high-low method, state the cost formula for each mixed expense. (Do not round intermediate calculations. Round the "X" answers to 2 decimal places.) Y-AS +A$ 3. Redo the company's income statement at the 6,000-unit level of activity using the contribution format. MORRISEY&BROWN, LTD. Income Statement For the Month Ended September 30 Sales in units 6,000 AS Less: Variable expenses: AS Less: Fixed expenses: AS