Exhibit 1 JW Sports Supplies (A) Income Statement for Most Recent Year of Operation Revenues $1,680,000 Cost of goods sold (COGS) 1,164,075 Gross margin 515,925 Selling, general, and administrative expenses (SG&A) 324,225 Profit before tax $ 190,700 Source: All exhibits created by author. Exhibit 2 JW Sports Supplies (A) Production/Sales Levels and Costs by Month Actual units Actual cost Jan 1,000 $ 100,000 Feb 1,100 $ 106,000 Mar 1,175 $ 105,000 Apr 1,250 $ 120,000 May 1,410 $ 128,000 Jun 1,520 $ 132,000 Jul 1,600 $ 135,000 Aug 1,710 $ 140,000 Sep 1,800 $ 148,000 Oct 1,970 $ 150,000 Nov 970 $ 150,000 Dec 1,970 $ 120,000 Jan 1,510 $ 140,000 Feb 1,650 $ 130,000 Mar 1,450 $ 115,000 Apr 1,200 $ 112,000 May 1,210 $ 130,000 Jun 1,900 $ 154,000 Jul 1,890 $ 162,000 Oct 1,600 $ 143,000 Nov 1,700 $ 148,000 Dec 1,850 $ 143,000

Exhibit 3 JW Sports Supplies (A) Description of Costs Cost Description Direct material Cost of material used to make the gym bags that could easily be traced to each bag. This included the cost of the material, zippers, shoulder strap, and handles. Direct labor Cost of paying workers who make the gym bags. Rent Amount paid to lease the facility where the gym bags were made. Depreciation Cost of the equipment used in making the gym bags. Electricity Cost obtained from the monthly utility bill for power to provide lighting and operate machinery. Other manufacturing Cost of materials not directly traceable to each bag (e.g., thread and glue); labor not working directly on gym bag assembly (e.g., maintenance and janitorial costs, setup of equipment, material handling, supplies). Selling Fixed salary paid to sales representative. Sales commission Amount paid to sales representative for each gym bag sold. Administrative General and administrative costs (e.g., purchasing, accounting, payroll).

For this assignment, we ask you to prepare both functional and contribution margin income statements based on concepts from the course and data from the JW Sports Supplies Case (Part A). Assume JW Sports Supplies ("the company") expects to produce and sell 1,500 units during the following month at a price of $100 per unit. a functional income statement that shows predicted revenues and cost a contribution margin statement that shows predicted revenues, costs, and profit before tax.