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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 companys income statements for the three most recent months follow:

MORRISEY & BROWN, LTD. Income Statements
For the Four Quarters Ending December 31
	Quarter 1			Quarter 2			Quarter 3			Quarter 4
Sales in units		5,700			5,200			6,440			5,800
Sales revenue	A$	570,000		A$	520,000		A$	644,000		A$	580,000
Less: Cost of goods sold		342,000			312,000			386,400			348,000
Gross margin		228,000			208,000			257,600			232,000
Less: Operating expenses:
Advertising expense		22,200			22,200			22,200			22,200
Shipping expense		38,800			40,800			45,760			40,560
Salaries and commissions		85,200			80,400			95,280			91,960
Insurance expense		7,200			7,200			7,200			7,200
Depreciation expense		16,200			16,200			16,200			16,200
Total operating expenses		169,600			166,800			186,640			178,120
Net income	A$	58,400		A$	41,200		A$	70,960		A$	53,880

(Note: Morrisey & Brown, Ltd.s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

Required:

1. Identify each of the companys expenses (including cost of goods sold) as being variable, fixed, or mixed.

	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.

	Variable Cost Fixed Cost ???????????? A$ ??????? per unit A$ ???? ???????????? A$ ??????? per unit A$ ???? ???????????? A$ ??????? per unit A$ ????

2-b. Using the high-low method, state the cost formula for each mixed expense.

	?????? Y= A$ ?????? + A$ ???? X ???? Y= A$ ??? + A$ ??? X ??? Y= A$ ???? + A$ ???? X

3. Redo the company's income statement at the 6,440-unit level of activity using the contribution format.

	MORRISEY & BROWN, LTD. Contribution Margin Income Statement For the Quarter Ended September 30 Sales in units A$ Less: Variable expenses: A$ 0 0 Less: Fixed expenses: 0 A$ 0

4. Assume that the companys sales are projected to be 5,100 units in the next quarter. Prepare a contribution margin income statement.

	MORRISEY & BROWN, LTD. Contribution Margin Projected Income Statement For the Quarter Ended March 31 Sales in units A$ Less: Variable expenses: A$ 0 0 Less: Fixed expenses: 0 A$ 0

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