D E F G Fixed Required: Classify each of the below operating expenses as variable or fixed. Cost Cost of goods sold increases proportionately with sales Employees are paid fixed monthly salaries supplemented by a commission on all sales except for the Parts & Service department's sales (see Q2 tab for segmented income statement and sales for this department). Monthly Salaries To be calculated by the group Commission as a percentage of sales 13% Rent components: Monthly 3,000 Percentage of sales 3% Utilities costs incurred are independent of sales volume (they will not change if 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. Note 1: Sales by Department (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes Sales $ 623,901 $ 773,131 $ Accessories Parts & Service 359,876 S 146,911 Part B: CVP Income Statement (Chapter 6) (13 marks) Prepare a contribution margin income statement (below), using the traditional income statement provided and the cost information provided in Part A Check figures have been provided to ensure you are on the right track. Ultimately your group will over-write the check figures with formulas, however, it will be your group's responsibility to ensure that you match up the check figures to the original workbook provided. Part B: UVP Income Statement (Chapter 6) (13 marks) Prepare a contribution margin income statement (below), using the traditional income statement provided and the cost Information provided in Part A Check figures have been provided to ensure you are on the right track. Ultimately your group will over-write the check figures with formulas, however, it will be your group's responsibility to ensure that you match up the check figures to the original workbook provided. Mountain Sports Lad. Contribution Margin Income Statement For the Year Ended Dec 31, 2019 TOTAL PERCENT Sales $1.903.819 100% Less: Variable Costs (must be listed in alphabetical order): Total variable costs Contribution Margin Less: Fixed Costs (must be listed in alphabetical order) Advertising TOTAL Operating Income Lets: Interest Expense Earnings Before Income Taxes Less: Income Taxes Net Income Calibri Light 11 1 fx Question 1: Cost Classificati B 5 7 3 A Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Part A 20 Sales 1 Cost of goods sold 12 Gross margin 1,903,819 743,838 1,159,981 Require Cost Cost of g. Employee Parts & SC departmer 13 Operating expenses: (See notes) 14 Advertising 15 Depreciation 16 Property taxes 17 Rent 18 19 Salaries and commissions 20 Cor Parts & service expenses Rent compo! Utilities 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 26 Net income 27 28 29 106,000 20,787 33,984 93,115 94,255 441,398 102,046 891 585 268,396 7.000 261,396 58,657 202.739 Utilities costs Parts and Serv The company The property ta Advertising bud Note 1: Sales by 30 Sales Part B: CVP Incom 31
