Question

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: MORRISEY & BROWN, LTD. Income Statements For the Three Months Ending September 30 July August 5,500 6,000 September 6,500 Sales in units Sales revenue Less: Cost of goods sold A$ 583,000 A$ 636,000 346,500 378,000 A$ 689,000 409,500 Gross margin 236,500 258,000 279,500 Less: Operating expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense 22,500 40,000 87,000 7,500 16,500 22,500 42,000 93,000 7,500 16,500 22,500 43,700 98,700 7,500 16,500 Total operating expenses 173,500 181,500 188,900 Net income A$ 63,000 A$ 76,500 A$ 90,600 (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$.)

Answer 1

All answers are attached below

Answer 1 Units July 5,500 3,46,500 63 August 6,000 3,78,000 63 Answer 1 September Classification 6,500 4,09,500 63 Variable COGS per unit Advertising Expense 22,500 22,500 22,500 Fixed Shipping Expense Per unit 40,000 7.27 42,000 7 43,700 6.72 Mixed Salaries and commision Per unit 87,000 15.82 93,000 15.50 98,700 15.18 Mixed Insurance Expense 7,500 7,500 7,500 Fixed Depreciation Expense 16,500 16,500 16,500 Fixed

Answer 2a High Low Method Shipping Expense July August Difference Salaries and Commission Expense July August Difference Units Shipping Expense Variable Expense per unit 5,500 40,000 6,000 42,000 500 (a) 2,000 (b) 4 (b/a) Units Shipping Expense Variable Expense per unit 5,500 87,000 6,000 93,000 500 (a) 6,000 (b) 12 (b/a) Variable Expense Fixed Expense 22,000 18,000 24,000 18,000 Variable Expense Fixed Expense 66,000 21,000 72,000 21,000 Shipping Expense Salaries & Commision Expense Variable Cost Fixed Cost $4 per unit 18,000 $12 per unit 21,000 Answer 2b Shipping Expense Salaries & Commision Expense $18,000 $21,000 4 X 12 X

Answer 3 MORRISEY & BROWN LTD INCOME STATEMENT FOR THE MONTH ENDED SEPTEMBER 30 Sales in units 6,500 6,89,000 Less: Variable Expenses Cost of Goods Sold Variable Shipping Expense (6,500 * 3.4) Variable Salaries & Commissions (6,500 * 11.4) Total Variable Cost 4,09,500 22,100 74,100 5,05,700 1,83,300 Less: Fixed Expenses Advertising Expense Fixed Shipping Expense (43,700 - 22,100) Fixed Salaries & Commissions Expense (98,700-74,100) Insurance Expense Depreciation Expense Total Fixed Expenses 22,500 21,600 24,600 7,500 16,500 92,700 90,600