FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm 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
For the Four Quarters Ending December 31
Quarter 1 Quarter 2
6,300
5,800
A$630,000 A$550,000
378,000 348,000
252,000
232,800
Sales in units
Sales revenue
Less: Cost of goods sold
Gross margin
Less: Operating expenses:
Advertising expense
Shipping expense
Salaries and commissions
Insurance expense
Depreciation expense
Total operating expenses
Net income
MORRISEY & BROWN, LTD.
Income Statements
Expenses
Cost of goods sold
Advertising expense
Shipping expense
Salaries and commissions
Insurance expense
Depreciation expense
22,800
41,200
88,800
7,800
16,800
177,400
AS 74,600 A$ 59,800
Advertising expense
Shipping pense
Salaries and commissions expense
Classificatio
Variable:
Fixed
Mixed
Mixed
Fixed
Fixed
(Note: Morrisey & Brown, Ltd's Australian-formatted income statement has been recast into the format common in Canada. The
Australian dollar is denoted by A$.)
D
Required:
1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed-
22,800
43,200
81,600
7,800
16,800
172,200
AS
A$
A$
G
Quarter 3 Quarter 4
7,160
6,400
A$716,000 A$640,000
429,600
384,000
286,400
256,000
22,800
48,648
97,920
7,800
16,800
193,960
AS 92,448
2-6. Using the high-low method, separate each mixed expense into variable and fixed elements.
22,800
42,840
95,440
7,800
16,800
185,680
AS 70,320
Variable Cost
18,400 per unit
0 per unit
0 per unit
AS
222
AS
AS
Fixed Cos
(55
1
1
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Transcribed Image Text:Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm 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 For the Four Quarters Ending December 31 Quarter 1 Quarter 2 6,300 5,800 A$630,000 A$550,000 378,000 348,000 252,000 232,800 Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total operating expenses Net income MORRISEY & BROWN, LTD. Income Statements Expenses Cost of goods sold Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 22,800 41,200 88,800 7,800 16,800 177,400 AS 74,600 A$ 59,800 Advertising expense Shipping pense Salaries and commissions expense Classificatio Variable: Fixed Mixed Mixed Fixed Fixed (Note: Morrisey & Brown, Ltd's Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.) D Required: 1. Identify each of the company's expenses (including cost of goods sold) as being variable, fixed, or mixed- 22,800 43,200 81,600 7,800 16,800 172,200 AS A$ A$ G Quarter 3 Quarter 4 7,160 6,400 A$716,000 A$640,000 429,600 384,000 286,400 256,000 22,800 48,648 97,920 7,800 16,800 193,960 AS 92,448 2-6. Using the high-low method, separate each mixed expense into variable and fixed elements. 22,800 42,840 95,440 7,800 16,800 185,680 AS 70,320 Variable Cost 18,400 per unit 0 per unit 0 per unit AS 222 AS AS Fixed Cos (55 1 1
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