1222 Mountain Sports Lid! Segmented Income Statement First empt statement think it's safe to say that I need het! For the Year Ended Dec 31, 2019 Cross Country Ski Mountain Accessor Parts & 10 Notes Bikes tes Service TOTAL 11. Salon 77950 334.727 12659 1897212 12 Cost of goods sold 4972 2022 292 1722 13 Cost # of goods sold 325X758 389 753 97640 833243 14 Gross Profil 335.008 389 87 2211087 12077 1064059 15 Operating expenses 16 Advertising 1 37 831 45.517 8.941 8.711 17 Depreciation 6.010 6,010 6010 60D 24039 18 Property taxes 9.946 99461 99461 19 Rent 21.487 21487 21.4071 21482 05051 34 198 20 Parls & service expense 40.325 918 123241 21 Salaries & commissions 121,6521 21652 11652 75.000 19 22 Utilities 26.524 26.524 25 Z 23 Total Operating Expenses 257.647| 271.461 21831 147677 31886 24 Operating income on 773611 718 426 3510 131 25 Interest expense B 2.000 2.000 2000 2000 20 Income Loss before taxes 75361 115.425 23204 4780 7399 27 Income tax 21.00 14 436 62021 2273 20 Net Income (Loss) $63) 119 $1019301 30 Noles to the financial statements: 1 Advertising is committed hitted to at the beginning of the period by management Management has man different forms of advertising campaigns with different focuses as follows 31 Cross country ski packages Mountain Accessorie Parts & Promotes TOTAL Bikes 5 Service company 32 Las a whole 333 34.000 41000$ 7.000 8.000 11000 101000 35 2. The company uses the straight-line method of depreciation BB 373. The property taxes are set by the City and do not change with changes in sales volume 38 39 4. Hent has two componenta 0 Monthly amount 4.000 Percentage based on each 1. departments sales 224 15. Parts and services expense varies with sales of cross country skis, mountain bikes, and accessories There are no parts & service expense for the parts & service department 6. Sales commissions are paid on sales for cross country skis, mountain bikes, and accessories. The Parts & Service department employees do not earn sales commissions on their sales - 12/4 $70,000 Sales commissions Total yearly salary of employees that sell skis, bikes, and accessories. These employees will continue to work for the company regardless of which product lines are offered. The store managers are paid a total yearly salary. They are responsible for all of the departments. These managers will continue to work even if any of the divisions are closed. The Parts & Service Employees only work in that department. If this department were closed the technicians would be laid off. The total salary for the technicians is $ 82,000 $ 75,000 7. Utilities are the same regardless of activity and will not change even if a product line is dropped. 8. Interest expense is charged on the outstanding bank loans. The total $ 8.000 9. Income taxes are calculated for the company as a whole. The company will have to pay taxes regardless of which product lines it offers, Required: Part A: (25 marks) 1) Restate the segmented income statement using the statement the junior accountant prepared and the notes to the financial statements (Chapter 7 Appendis) Check figures have been provided to ensure you are on the right track. If you are not arriving at the check figures, please discuss with your group members to determine where you went wrong See the word document provided to your group containing the check Figures! Notes: The percentage column should be taken as a percentage of sales (for example, cost of goods sold for mountain bikes should be taken as a % of mountain bike sales) There may be small rounding differences where total amounts are off by $1, that is ok! Make sure you are using full Excel functionality and entering formulas into each cell. You cannot use your calculator and input the final ansver. Note from Kelly, Junior accountant The sales and cost of goods sold information is correct so I slotted it in the owner confirmed that these were correct). As far Mountain Sports Lid. Segmented Income Statement-By Product Line For the Year Ended. December 31, 2019 OSS Count Ski Packad Mountain Bikes Accessories Amount Percent Amount Peroent Amount Percent SALES 660.766 100% 779.150 100 0 334.727 100.0% Less: Variable Costs (MUST BE LISTED ALPHABETICALLYI Parts and Service Amount Percent TOTA Amount Percent 122.659 100024 1.897.302 100.0% Cost of Goods Sold 325758 49.324 389.263 50.0% 97,640 29.24 20.582 16.854 833,243 43 924 Note from instructor TOTAL Any figures prvided in the statement are check figure of you do not arrive at these numbers, please revisit and discuss with your group members. It is your group's responsability to ensure that the check figures match the original check figures provided Less Traceable Fixed costs (MUST BE LISTED ALPHABETICALLY TOTAL Trageable Flued Costs Less Common Fined Costs (MUST BE LISTED ALPHABETICALLYI Part 2b: Analysis (16 marks) 2. Vhich product line does the best job of turning sales into profits? (hint: see SEG questions in chapter 7 workbook) 3. Management has been trying to decide if any departments should be closed. Based on the segmented income statement you prepared. what are your recommendations to management? Vhich (if any) department should be closed? . Management had been considering closing the Parts & Service Department based on the closed, management estimates that sales for both Cross Country skis and Mountain Bikes vill decrease (see percentage below). Calculate the overall decrease in income to the company as a whole if the parts & service department is closed. 107 0 Decrease in Oross country skis and mountain bikes Sho all amounts as positive numbers: Contribution Margin Lost: Parts & Service Department Cross Country Skis Mountain Bikes Total CM Lost Fixed Costs Avoided Increase (decrease in income 5. Based on both quantitative and qualitative analysis. should the Parts & Service Department be closed? Explain to management in a way that they can understand. Be sure to use your answer from the previous part in your response. Do not give textbook ansers. use question data! (2 marks) 6.Please write a brief memo to the junior accountant explaining the changes you made to che segmented income statement. Textbook definitions will not be awarded marks. Please use question data and your own words. Even though the junior accountant has some in Oy that both the junior accountant and the owners can understand. (5 marks) accounting background. the owners do not. As such. please ensure you write explanations 1222 Mountain Sports Lid! Segmented Income Statement First empt statement think it's safe to say that I need het! For the Year Ended Dec 31, 2019 Cross Country Ski Mountain Accessor Parts & 10 Notes Bikes tes Service TOTAL 11. Salon 77950 334.727 12659 1897212 12 Cost of goods sold 4972 2022 292 1722 13 Cost # of goods sold 325X758 389 753 97640 833243 14 Gross Profil 335.008 389 87 2211087 12077 1064059 15 Operating expenses 16 Advertising 1 37 831 45.517 8.941 8.711 17 Depreciation 6.010 6,010 6010 60D 24039 18 Property taxes 9.946 99461 99461 19 Rent 21.487 21487 21.4071 21482 05051 34 198 20 Parls & service expense 40.325 918 123241 21 Salaries & commissions 121,6521 21652 11652 75.000 19 22 Utilities 26.524 26.524 25 Z 23 Total Operating Expenses 257.647| 271.461 21831 147677 31886 24 Operating income on 773611 718 426 3510 131 25 Interest expense B 2.000 2.000 2000 2000 20 Income Loss before taxes 75361 115.425 23204 4780 7399 27 Income tax 21.00 14 436 62021 2273 20 Net Income (Loss) $63) 119 $1019301 30 Noles to the financial statements: 1 Advertising is committed hitted to at the beginning of the period by management Management has man different forms of advertising campaigns with different focuses as follows 31 Cross country ski packages Mountain Accessorie Parts & Promotes TOTAL Bikes 5 Service company 32 Las a whole 333 34.000 41000$ 7.000 8.000 11000 101000 35 2. The company uses the straight-line method of depreciation BB 373. The property taxes are set by the City and do not change with changes in sales volume 38 39 4. Hent has two componenta 0 Monthly amount 4.000 Percentage based on each 1. departments sales 224 15. Parts and services expense varies with sales of cross country skis, mountain bikes, and accessories There are no parts & service expense for the parts & service department 6. Sales commissions are paid on sales for cross country skis, mountain bikes, and accessories. The Parts & Service department employees do not earn sales commissions on their sales - 12/4 $70,000 Sales commissions Total yearly salary of employees that sell skis, bikes, and accessories. These employees will continue to work for the company regardless of which product lines are offered. The store managers are paid a total yearly salary. They are responsible for all of the departments. These managers will continue to work even if any of the divisions are closed. The Parts & Service Employees only work in that department. If this department were closed the technicians would be laid off. The total salary for the technicians is $ 82,000 $ 75,000 7. Utilities are the same regardless of activity and will not change even if a product line is dropped. 8. Interest expense is charged on the outstanding bank loans. The total $ 8.000 9. Income taxes are calculated for the company as a whole. The company will have to pay taxes regardless of which product lines it offers, Required: Part A: (25 marks) 1) Restate the segmented income statement using the statement the junior accountant prepared and the notes to the financial statements (Chapter 7 Appendis) Check figures have been provided to ensure you are on the right track. If you are not arriving at the check figures, please discuss with your group members to determine where you went wrong See the word document provided to your group containing the check Figures! Notes: The percentage column should be taken as a percentage of sales (for example, cost of goods sold for mountain bikes should be taken as a % of mountain bike sales) There may be small rounding differences where total amounts are off by $1, that is ok! Make sure you are using full Excel functionality and entering formulas into each cell. You cannot use your calculator and input the final ansver. Note from Kelly, Junior accountant The sales and cost of goods sold information is correct so I slotted it in the owner confirmed that these were correct). As far Mountain Sports Lid. Segmented Income Statement-By Product Line For the Year Ended. December 31, 2019 OSS Count Ski Packad Mountain Bikes Accessories Amount Percent Amount Peroent Amount Percent SALES 660.766 100% 779.150 100 0 334.727 100.0% Less: Variable Costs (MUST BE LISTED ALPHABETICALLYI Parts and Service Amount Percent TOTA Amount Percent 122.659 100024 1.897.302 100.0% Cost of Goods Sold 325758 49.324 389.263 50.0% 97,640 29.24 20.582 16.854 833,243 43 924 Note from instructor TOTAL Any figures prvided in the statement are check figure of you do not arrive at these numbers, please revisit and discuss with your group members. It is your group's responsability to ensure that the check figures match the original check figures provided Less Traceable Fixed costs (MUST BE LISTED ALPHABETICALLY TOTAL Trageable Flued Costs Less Common Fined Costs (MUST BE LISTED ALPHABETICALLYI Part 2b: Analysis (16 marks) 2. Vhich product line does the best job of turning sales into profits? (hint: see SEG questions in chapter 7 workbook) 3. Management has been trying to decide if any departments should be closed. Based on the segmented income statement you prepared. what are your recommendations to management? Vhich (if any) department should be closed? . Management had been considering closing the Parts & Service Department based on the closed, management estimates that sales for both Cross Country skis and Mountain Bikes vill decrease (see percentage below). Calculate the overall decrease in income to the company as a whole if the parts & service department is closed. 107 0 Decrease in Oross country skis and mountain bikes Sho all amounts as positive numbers: Contribution Margin Lost: Parts & Service Department Cross Country Skis Mountain Bikes Total CM Lost Fixed Costs Avoided Increase (decrease in income 5. Based on both quantitative and qualitative analysis. should the Parts & Service Department be closed? Explain to management in a way that they can understand. Be sure to use your answer from the previous part in your response. Do not give textbook ansers. use question data! (2 marks) 6.Please write a brief memo to the junior accountant explaining the changes you made to che segmented income statement. Textbook definitions will not be awarded marks. Please use question data and your own words. Even though the junior accountant has some in Oy that both the junior accountant and the owners can understand. (5 marks) accounting background. the owners do not. As such. please ensure you write explanations