G morrisey & brown, ltd., of sydney is a merchandising company 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:

Required:

By analyzing the data from the company's income statements, classify each of its expenses (including cost of goods sold) as either variable, fixed, or mixed.

Answer:

Variable expenses: they increase when the total amount of units sold increases, and decreases when the total amount of units sold decrease.

Cost of goods sold (COGS) Shipping expenses Commissions: usually salespeople earn a fixed amount (fixed salary) and a variable amount based on sales commissions.

Fixed expenses: they do not depend on the total amount of units sold

Advertising expense Insurance expense Depreciation expense Salaries: the fixed amount that salespeople earn (doesn't include sales commissions)

Explanation:

month 1 month 2 month 3

Cost of goods sold 375,000 412,500 450,000

Advertising expense 22,800 22,800 22,800

Shipping expense 46,000 48,800 51,600

Salaries and commissions 92,000 98,400 104,800

Insurance expense 6,050 6,050 6,050

Depreciation expense 24,700 24,700 24,700