Morrisey & Brown, Limited, is the sole distributor of a product with growing sales. Its income statements for the three most recent months follow: Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 July Sales in units Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses Net operating income 6,750 $ 742,500 445,500 297,000 33,800 69,500 125,000 9,900 22,100 260,300 $36,700 August 7,250 $ 797,500 478,500 319,000 33,800 73,700 132, 100 9,900 22,100 271, 600 $ 47,400 September 7,750 $ 852,500 511,500 341,000 33,800 77,900 139,200 9,900 22,100 282,900 $ 58,100 Required: 1. By analyzing 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 7,750-unit level of activity using the contribution format.

Morrisey & Brown, Limited, is the sole distributor of a product with growing sales. Its income statements for the three most recent months follow: Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 July Sales in units Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses Net operating income 6,750 $ 742,500 445,500 297,000 33,800 69,500 125,000 9,900 22,100 260,300 $36,700 August 7,250 $ 797,500 478,500 319,000 33,800 73,700 132, 100 9,900 22,100 271, 600 $ 47,400 September 7,750 $ 852,500 511,500 341,000 33,800 77,900 139,200 9,900 22,100 282,900 $ 58,100 Required: 1. By analyzing 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 7,750-unit level of activity using the contribution format.

Name: Morrisey & Brown, Limited, is the sole distributor of a product with
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Description: Morrisey & Brown, Limited, is the sole distributor of a product with growing sales. Its income statements for the three most recentmonths follow:Morrisey & Brown, LimitedIncome StatementsFor the Three Months Ended September 30JulySales in unitsSales

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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