Problem 6A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement [LO6-10) 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 company's 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 7.000 7,500 8,000 Sales 5 735,000 $ 787,500 $ 840,000 Coat of goods sold 441,000 472,500 504,000 Gross margin 294,000 315,000 336,000 Selling and administrative expenses Advertising expense 36,400 36,400 36/400 Shipping expense 75,000 79,400 83,800 salaries and commissions 120,000 127,200 134,400 Insurance expense 8,400 8,400 8.400 Depreciation expense 22,800 22.800 22.800 Total selling and administrative expenses 262,500 274,200 285,800 Net operating Income $ 31,400 $ 40,000 $ 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 elther 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 Required 2 Required 3 By analyzing the data from the company's income statements, classify each of its expens 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 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 the form Y = a + bx. (Round the Variable cost per unit to 1 decimal place.) Variablo Cost Fixed Cost Formula per unit per unit Y= Y Required 1 Required 2 Required 3 Redo the company's income statement at the 8,000-unit level of activity using the contribution F Morrisey & Brown, Limited Income Statement For the Month Ended September 30 Variable expenses: Fixed expenses: