1 Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) 2 3 Note from Kelly the junior accountant Hi there! Welcome to the team. I'm ly the junior accountant here at Mountain Sports. I've been working with the company for while now helping out with the bookeeping My mom is one of the owners. Anyway I am quite comfortable with preparing a traditional income statement this is the income statement learned to prepare infancial account. However, the owners are Interested in quite a few CVP concepts. lamed about these in my introductory managerial accounting course but it's been aw could you hele mecanity each of the operative expenses as variable or foued expenses Put A below)? After that I think it would be below to prepare a CVP income statement (Part 6) so that those other concepte brutave margin of safety etc) can be calculated (Part Cl. My mom thought it would be a great idea to present these calculation along with detailed exploration to all of the owners she three of the owners aren't actively involved in the day to day operation of the business. On / should roll you the owners do not have an account background so we ne to explain those CVP concept in a way that they can understand thanks so much for your help! 0 Mountain Sports und Income Statement For the Year Ended Dec 31, 2019 9 10 Sales Port Cort Classification (Chapter 2,06 marks) Required: Classify each of the below operating expenses as variable or feed. 1.899.287 11 Cost of goods sold 12 Gross margin 782.808 1.116,429) Cost Variable or Fhed Cost of goods sold increases proportionately with sales Variable Employees are paid foed monthly salaries supplemented by a commission on all sales except for the Parts & Service department's sales see note 1 below for sales for each segment) Fixed Variable 13 Operating expenses: See notes) 14 Advertising 15 Depreciation 16 Property taxes 12 Rent 18 Parts & service expenses 19 Salaries and commissions 20 Utilities 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 26 Net income 27 28 90,000 24,511 39.993 54,993 92.335 475,162 106,479 883,473 233,006 6,000 227,006 47671 179.3335 Monthly Salaries To be culated by the group Commission as a percentage of sales 14% Rent components Monthly 3,000 Percentage of sales IN Utilities costs incurred are independent of sales volume (they will not channel sales volume Parts and Service expense varies with sales activity and can be traced to each product line The company uses straight-line depreciation on all depreciable assets The property taxes are set by the City and do not change with changes in sales volume. Advertising budgets are committed to at the beginning of each year Fixed Variable Fixed Variable Fred Fored Fxed Note 1: Sales by Segment taken from 22 segmented income statement) Cross Country Ski Packages Mountain Bikes Accessories Parts & Service Sales S 684,278 764,907 316,2585 133,844 25 Income 26 Net income 22 47,671 129.03 = = = = = = D Note 1: Sales by Segment taken from segmented income statement Cross Country Sk Packages Mountain Bikes Accessories Parts & Service Sales 5 764,025 316,2585 Part I CVP Income Statement Chapter 13 29 30 31 33 Prepare a contribution margincome statement betwing the traditional income statement provided and the cost information provided in Port A Check figures have been provided to ensure you are on the right track. See the word document provided to your ! Mountain Sportstid Notfromtor Adomas the Contributin Margin income Statement completed with the web. DA For the ended Dec 31, 2019 we actor and in the final aww. Wonder and you will TOTAL med Topic PERCENT for ali rakulatore nuty 36 3 TA 100% 19 40 Note from for you will be marked incorrect if you do not follow wat Please ready 412 12.0% 42 Sales $1.899.217 Last Variable costs must be listed in phabetical order Cost of Goods Sold 782 106 Commissions 227,014 Parts & Service expense 92,335 Hent 37986 Total variable costs 1.141,043 Contribution Margin 758,244 Less Fixed Costs must be listed in phabetical order Advertising expense 90,000 4.9% 2.0% 60.1% 5 6 7 Depreciation 244,511 Property Tas Rent Salaries Ubilities 39,993 54.393 475,162 106.479 VULLE Net Income LIN 32.934 PVP Artesanal Calate folowing and anschalten werd te stowwhat number you were writiwwe that count and for rent of $1,000, what do 1.000 meter Cal Urve Pantin Don n Marino Satin wree of Operating levere NA The junior countant la note for your In the runwalcune American really do now? Wharder ve was better to have won the were asked they show focus more on bleu de They at the increase evt yea bied 1 Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) 2 3 Note from Kelly the junior accountant Hi there! Welcome to the team. I'm ly the junior accountant here at Mountain Sports. I've been working with the company for while now helping out with the bookeeping My mom is one of the owners. Anyway I am quite comfortable with preparing a traditional income statement this is the income statement learned to prepare infancial account. However, the owners are Interested in quite a few CVP concepts. lamed about these in my introductory managerial accounting course but it's been aw could you hele mecanity each of the operative expenses as variable or foued expenses Put A below)? After that I think it would be below to prepare a CVP income statement (Part 6) so that those other concepte brutave margin of safety etc) can be calculated (Part Cl. My mom thought it would be a great idea to present these calculation along with detailed exploration to all of the owners she three of the owners aren't actively involved in the day to day operation of the business. On / should roll you the owners do not have an account background so we ne to explain those CVP concept in a way that they can understand thanks so much for your help! 0 Mountain Sports und Income Statement For the Year Ended Dec 31, 2019 9 10 Sales Port Cort Classification (Chapter 2,06 marks) Required: Classify each of the below operating expenses as variable or feed. 1.899.287 11 Cost of goods sold 12 Gross margin 782.808 1.116,429) Cost Variable or Fhed Cost of goods sold increases proportionately with sales Variable Employees are paid foed monthly salaries supplemented by a commission on all sales except for the Parts & Service department's sales see note 1 below for sales for each segment) Fixed Variable 13 Operating expenses: See notes) 14 Advertising 15 Depreciation 16 Property taxes 12 Rent 18 Parts & service expenses 19 Salaries and commissions 20 Utilities 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 26 Net income 27 28 90,000 24,511 39.993 54,993 92.335 475,162 106,479 883,473 233,006 6,000 227,006 47671 179.3335 Monthly Salaries To be culated by the group Commission as a percentage of sales 14% Rent components Monthly 3,000 Percentage of sales IN Utilities costs incurred are independent of sales volume (they will not channel sales volume Parts and Service expense varies with sales activity and can be traced to each product line The company uses straight-line depreciation on all depreciable assets The property taxes are set by the City and do not change with changes in sales volume. Advertising budgets are committed to at the beginning of each year Fixed Variable Fixed Variable Fred Fored Fxed Note 1: Sales by Segment taken from 22 segmented income statement) Cross Country Ski Packages Mountain Bikes Accessories Parts & Service Sales S 684,278 764,907 316,2585 133,844 25 Income 26 Net income 22 47,671 129.03 = = = = = = D Note 1: Sales by Segment taken from segmented income statement Cross Country Sk Packages Mountain Bikes Accessories Parts & Service Sales 5 764,025 316,2585 Part I CVP Income Statement Chapter 13 29 30 31 33 Prepare a contribution margincome statement betwing the traditional income statement provided and the cost information provided in Port A Check figures have been provided to ensure you are on the right track. See the word document provided to your ! Mountain Sportstid Notfromtor Adomas the Contributin Margin income Statement completed with the web. DA For the ended Dec 31, 2019 we actor and in the final aww. Wonder and you will TOTAL med Topic PERCENT for ali rakulatore nuty 36 3 TA 100% 19 40 Note from for you will be marked incorrect if you do not follow wat Please ready 412 12.0% 42 Sales $1.899.217 Last Variable costs must be listed in phabetical order Cost of Goods Sold 782 106 Commissions 227,014 Parts & Service expense 92,335 Hent 37986 Total variable costs 1.141,043 Contribution Margin 758,244 Less Fixed Costs must be listed in phabetical order Advertising expense 90,000 4.9% 2.0% 60.1% 5 6 7 Depreciation 244,511 Property Tas Rent Salaries Ubilities 39,993 54.393 475,162 106.479 VULLE Net Income LIN 32.934 PVP Artesanal Calate folowing and anschalten werd te stowwhat number you were writiwwe that count and for rent of $1,000, what do 1.000 meter Cal Urve Pantin Don n Marino Satin wree of Operating levere NA The junior countant la note for your In the runwalcune American really do now? Wharder ve was better to have won the were asked they show focus more on bleu de They at the increase evt yea bied