Question
Mountain Sports Ltd. is a small, Lethbridge-based company located on a major street in the west end.Marconi, an owner, is the Company President while Jeff
Mountain Sports Ltd. is a small, Lethbridge-based company located on a major street in the west end.Marconi, an owner, is the Company President while Jeff Peterson, another owner, holds the position of Marketing Manager.The company was formed in2012.
Mountain Sports carries a limited line of products and services that can be divided into foursegments:
1.Cross-country ski packages (skis, boots, and poles)
2.Mountain bicycles
3.Accessories
4.Repair and service department
III.Question 1 Contribution Margin Income Statement & CVP Analysis
Mountain Sports Ltd
Income Statement
For the year ending December 31, 2018
Sales: $1,957,427
COGS: 833,623
Gross profit on sales: ----------------- $1,123,804
Operating expenses:
Advertising: $ 98,900
Depreciation: 21,528
Property Taxes: 32,000
Rent: 48,000
Repairs & service equipment: 94,944
Salaries and commissions: 391,160
Utilities: 100,000
Total operating expenses: --------------- 786,532
-----------------
Operating income: $337,272
Part A:(answer in the Excel Solution Workbook file on the Question 1 tab)
In order to evaluate the operations of Mountain Sports Ltd., you must reformat the company's 2018 Income Statement using the Contribution Margin Income Statement approach.
The following information relates tooperating expenses:
- Total fixed salary costs are $207,199. Employees of the Cross-Country Ski Packages, Mountain Bicycles, and Accessories divisions receive a 10% commission on all sales. The Repair & Service department's employees do not receive a commission.
- The rent is fixed at $4,000 per month.
- Utilities are fixed costs.
- Repairs and Service expense varies with sales activity.
- Depreciation and property taxes are fixed costs.
- Advertising costs are fixed.
*****On the Contribution Margin Income Statement, the CONTRIBUTION MARGIN is $844,899 and the OPERATING INCOME answer should be $337,272 ******
I have to fill the BLANKS in.
Total Percentage
Sales $1,957,427 100%
Less: Variable cost:
COGS BLANK BLANK
BLANK BLANK BLANK
BLANK BLANK BLANK
Total Variable Costs BLANK BLANK
Contribution Margin $844,899 43.2%
Less: Fixed costs:
Advertising and Promotion BLANK
BLANK BLANK
BLANK BLANK
BLANK BLANK
BLANK BLANK
BLANK BLANK
Total Fixed Costs BLANK
Operating Income $337,272
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