Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole di

Question

Morrisey & Brown, Ltd., 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:

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 9,250-unit level of activity using the contribution format.

I need assistence with requirment 3

Morrisey & Brown, Ltd.
Income Statements
For the Three Months Ended September 30 July August September Sales in units 8,250 8,750 9,250 Sales $ 783,750 $ 831,250 $ 878,750 Cost of goods sold 470,250 498,750 527,250 Gross margin 313,500 332,500 351,500 Selling and administrative expenses: Advertising expense 25,400 25,400 25,400 Shipping expense 102,500 107,900 113,300 Salaries and commissions 150,000 157,700 165,400 Insurance expense 7,350 7,350 7,350 Depreciation expense 21,400 21,400 21,400 Total selling and administrative expenses 306,650 319,750 332,850 Net operating income $ 6,850 $ 12,750 $ 18,650 Required 1 Required 2 Required 3 Redo the company's income statement at the 9,250-unit level of activity using the contribution format. 2 points Morrisey & Brown, Ltd Income Statement For the Month Ended September 30 eBook Variable expenses: Print References Fixed expenses Required 2 Required 3

Explanation / Answer

Income Statement ( For 9250 Unit) Sales $878,750 Less: Variable Expenses: Cost of goods sold $527,250 Shipping Expense** $99,900 Salaries and Commission Expense*** $142,450 Total variable expenses $769,600 Contribution $109,150 Less: Fixed Expenses: Advertising expense $21,000 Shipping Expense** $13,400 Salaries and Commissions*** $22,950 Insurance Expense $7,350 Depreciation Expense $21,400 Total Fixed Expenses $86,100 net operating Income $23,050 Shipping Expense** variable cost per unit = ($113300-$102500)/(9250-8250)=$10.80 Fixed Cost = $102500-(8250*$10.80)= $13400 Salaries and commission*** variable cost per unit = ($165400-$150000)/(9250-8250)= $15.40 Fixed cost = $150000-(8250*$15.40)=$22950

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