Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Sales 1,897,302! Cost of goods sold Gross margin Cost 833,243 1064,059 Operating expenses: (See notes) Advertising Depreciation Property taxes Part A: Cost Classification (Chapter 2.6) (5 marks) Required: Classify each of the below operating expenses as variable or fixed. Variable or Fixed 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 note 1 below for sales for each segment) Monthly Salaries To be calculated by the group Commission as a percentage of sales 12% Rent components Monthly 4,000 Percentage of sales 2% Utilities costs incurred are independent of sales volume (they will not change if sales Parts and Service expense varies with sales activity and can be traced to each 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 Advertising budgets are committed to at the beginning of each year. Rent 101,000 24.039 39.784 85.946 91,846 439,957 106,096 888.668 175.391 8,000 167,391 35152 132,239 Parts & service expenses Salaries and commissions Utilities Total operating expenses Operating income Interest expenses Income before taxes Income taxes Net income Note 1: Sales by Segment (taken from Q2 segmented income statement) Cross Country Ski Packa Mountain Bike Accessories Parts & Service Sales 660,766 $ 779,150 $ 334,727 $ 122,659 Part RTVP Inner. 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. See the word document provided to your group! Mountain Sports Ltd Contribution Margin income Statement For the Year Ended Dec 31, 2019 Note from Instructor: All formatas must be completed within the answer boxes. Do not use a calculator and input the final answer It will result in rounding errors and you will be marked as incorrect. This is applicable for al calculations in the case study TOTAL PERCENT 100, Sales $1897,3021 Less: Variable Costs (must be listed in alphabetical order Note from Instructor: You will be marked as incorrect if you do not follow instructions! Please read carefully! Total variable costs Less Feed Costs must be listed in alphabetical order) Advertising TOTAL Part C. CVP Analysis (Chapter 6) (9 marks) Calculate the following and explain each calculation (in your own words). Be sure to explain what the number you've calculated means, ensuring you write it in a way so that a non-accountant can understand. For example, if you calculate a breakeven point Calculation Explanation 1 Breakeven Point in Sales Dollars Note from Instructor: You may increase the site of the columns, however, do not change the formatting Do not merge cells in any of the answer boxes. In other questions, you may need to increase the size of the column but again, please do not merge any cells. 21 Margin of Safety (In peroent) 31 Degree of Operating Leverage (DOL) operating income to be used in calculation) 4 The junior accountant left a note for you: hthe managerial accounting course thrlicat Ilearned the degree clanerating Inserage is a measure crisk Idontreally understand that Can you in meiner does lessenger man? si eller to have high leverage or low leverage? The owners have asked me if they should focus more on vanae casts cind costs What should I say They are har sales will increase men war NA-NO calculations needed