Note- Check figures.Shipping: A$18,000 per month plus A$4 per unit Page 265Required:1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed.2. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixedexpense.3. Redo the company's income statement at the 5,000-unit level of activity using the contribution format.4. Assume that the company's sales are projected to be 4,500 units in the next quarter. Prepare a contribution margin income statement. Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularityamong Australian consumers. The company's income statements for the three most recent months follow:MORRISEY & BROWN, LTD.Income StatementsFor the Four Quarters Ending December 31Quarter 1Quarter 2Quarter 3Quarter 4Sales in units4,4004,0005.0004,600Sales revenueA$440,000A$400,000A$500,000A$460,000Less: Cost of goods sold264,000240,000300,000276,000Gross margin176.000160,000200,000184,000Less: Operating expenses:Advertising expense21,00021,00021,00021,000Shipping expense35,00034,00038,00036,000Salaries and commissions83,00078,00090,00085,000Insurance expense6,0006,0006,0006,000Depreciation expense15,00015,00015,00015,000Total operating expenses160,000154,000170,000163,000Net incomeA$ 16,000A$ 6,000A$ 30,000A$21,000(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.)

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Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. 2. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed еxpense. 3. Redo the company's income statement at the 5,000-unit level of activity using the contribution format.

Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed. 2. Using the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed еxpense. 3. Redo the company's income statement at the 5,000-unit level of activity using the contribution format.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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