Help Morrisey ustralian consumers. The company\'s income statements for the thre

Question

Help Morrisey ustralian consumers. The company's income statements for the three most recent months follow is a merchandising company that is the sole distributor of a product that is ing in popularity Incone Statements For the Three Months Ended September 30 6,000 630,000 6,500 682,500 409,500 273, 000 5,500 $577,500 346,500 231,000 378,000 252,000 Gross margin Selling and administrative expenses 24,200 60,200 110,600 9,200 19,600 223,800 $28,200 Advertising expense Shipping expense Salaries and commissions 24,200 57,000 104,000 9,200 19,600 214.000 s 17,000 24,200 63,400 117,200 9,200 19,600 233,600 $ 39,400 Depreciation expense 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 6,500-unit level of activity using the contribution format Complete this question by entering your answers in the tabs below.

Explanation / Answer

Requirement 1 Expenses Classification Cost of goods sold Variable Advertise expenses Fixed Shipping Expenses Mixed Salaries & Commissions Mixed Insurance Expenses Fixed Depreciation Expense Fixed Rquirement 2 Variable cost Fixed cost Shipping Expenses $6.40 Per Unit $21800 Y= $21800 + $6.40 X Salaries & Commissions $13.20 Per Unit $31400 Y= $31400 + $13.20 X Shipping Expenses Cost Units High Level 63400 6500 Low level 57000 5500 Change 6400 1000 variable cost per Unit = Change in cost / Change in Units =$6400/1000 =$6.40 Fixed cost = Total Cost at 6500 Units - 6500*$6.40 =$63400 -6500*$6 =$21800 Salaries & Commission Cost Units High Level 117200 6500 Low level 104000 5500 Change 13200 1000 variable cost per Unit = Change in cost / Change in Units =$13200/1000 =$13.20 Fixed cost = Total Cost at 6500 Units - 6500*$6.40 =$63400 -6500*$13.20 =$31400 Requirement 3 MORRISEY &BROWN , LTD Income Statement at the activity level of 6500 Units Amount in $ Sales 682500 less: Variable Expenses Cost of goods sold 409500 Shipping Expenses 6500*$6.4 41600 Salaries & Commissions 6500*$13.20 85800 Contribution Margin 145600 Less: Fixed Expenses Shipping Expenses 21800 Salaries & Commissions 31400 Insurance Expenses 9200 Depreciation Expense 19600 Advertisement Expenses 24200 Net operating Income 39400

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