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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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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