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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 companys income statements for the three most recent months follow:

Income Statement For the Month Ended September 30 Sales $ 750,000 Variable expenses: Cost of goods sold Fixed manufacturing overhead Shipping expense Salaries and commissions expense Administrative expenses 0 Contribution margin 750,000 Fixed expenses: Advertising expense Shipping expense Salaries and commissions expense Insurance expense Depreciation expense Ending merchandise inventory Salaries and commissions expense 0 Net operating income $ 750,000 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 Sales in units 5,000 5,500 Sales $ 625,000 $ 687,500 Cost of goods sold 375,000 412,500 Gross margin 250,000 275,000 Selling and administrative expenses: Advertising expense 22,800 22,800 Shipping expense 46,000 48,800 Salaries and commissions 92,000 98,400 Insurance expense 6,050 6,050 Depreciation expense 24,700 24,700 Total selling and administrative expenses 191,550 200, 750 Net operating income $ 58,450 $ 74,250 September 6,000 $ 750,000 450,000 300,000 22,800 51,600 104,800 6,050 24,700 209,950 $ 90,050 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 6,000-unit level of activity using the contribution format

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