Question

ezto.mhe 10.00 points rown, Ltd, of Sydney, Austraia, is a merchandising firm that is the sole distributor of a produ that is increasing in popularity among Australian consumers. The company's income statements for the hree most recent months follow: MORRISEY & BROWN, LTD Income Statements For the Three Months Ending September 30 August September 6,000 Sales in units 5,000 5,500 Sales revenue AS 520,000 A$ 572,000 A$ 624,000 310,000341,000 372,000 Less: Cost of goods sold Gross margin Less: Operating expenses: 210,000231,000 252,000 Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 22,000 22,000 22,000 90,000 16,000 167,000175,000 182,600 38,000 84,000 7,000 16,000 41,800 7,000 7,000 16,000 Total operating expenses Net income AS 43,000 AS 56,000 A$ 69,400 (Note: Morrisey & Brown. Ltd.'s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by AS.)

Answer 1

2a.

	Variable Cost	Fixed Cost
Shipping Expense	A $ 3.80 per unit	A $ 19,000
Salaries and Commissions	A $ 11.80 per unit	A $ 25,000
	A $ 15.60 per unit	A $ 44,000

Variable cost per unit for shipping expense= ( $ 41,800 - $ 38,000 ) / ( 6,000 - 5,000 ) = $ 3.80.

Salaries and commissions for shipping expense = ( $ 95,800 - 84,000 ) / $ ( 6,000 - 5,000 ) = $ 11.80

2 b.

Shipping Expense	y =	A $ 19,000 +	A $ 3.80 x
Salaries and Commissions	y =	A $ 25,000 +	A $ 11.80 x

3.

Morrisey & Brown Ltd. Income Statement For the month ended September 30
Sales in units		6,000
Sales Revenue		A $ 624,000
Less: Variable Expenses
Cost of Goods Sold	372,000
Shipping Expenses ( 6,000 x $ 3.80)	22,800
Salaries and Commissions ( 6,000 x $ 11.80)	70,800	465,600
Contribution Margin		158,400
Fixed Costs
Advertising Expense	22,000
Shipping Expense	19,000
Salaries and Commissions Expense	25,000
Insurance Expense	7,000
Depreciation Expense	16,000	89,000
Net Operating Income		A $ 69,400