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 7,500 8,000 8,500 $ 712,500 427,500 285,000 $ 760,000 $ 807,500 484,500 Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense 456,000 304,000 323,000 39,600 39,600 81,000 135,000 85,800 142,400 6,100 39,600 90,600 149,800 6,100 Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses 6,100 19,300 281,000 $ 4,000 19,300 293,200 $ 10,800 19,300 305,400 $ 17,600 Net operating income 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 8,500-unit level of activity using the contribution format.
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 7,500 8,000 8,500 $ 712,500 427,500 285,000 $ 760,000 $ 807,500 484,500 Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense 456,000 304,000 323,000 39,600 39,600 81,000 135,000 85,800 142,400 6,100 39,600 90,600 149,800 6,100 Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses 6,100 19,300 281,000 $ 4,000 19,300 293,200 $ 10,800 19,300 305,400 $ 17,600 Net operating income 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 8,500-unit level of activity using the contribution format.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do the ones that have x's on them.
Transcribed Image Text:Morrisey & Brown, Limited
Income Statement
For the Month Ended September 30
Sales
$ 807,500
Variable expenses:
Cost of goods sold
$ 484,500
Shipping expense
90,600
Salaries and commissions expense
149,800
724,900
Contribution margin
Fixed expenses:
82,600
Advertising expense
2$
39,600
Shipping expense
9,000
Salaries and commissions expense
24,000
Insurance expense
6,100
Depreciation expense
19,300
98,000
Net operating income
$ (15,400)
Transcribed Image Text: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
7,500
8,000
8,500
$ 712,500
427,500
285,000
$ 760,000
456,000
304,000
$ 807,500
484,500
323,000
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Advertising expense
Shipping expense
Salaries and commissions
Insurance expense
39,600
39,600
85,800
142,400
39,600
90,600
81,000
135,000
6,100
19,300
281,000
149,800
6,100
Depreciation expense
Total selling and administrative expenses
6,100
19,300
293,200
19,300
305,400
Net operating income
$ 4,000
$ 10,800
$ 17,600
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 8,500-unit level of activity using the contribution format.
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