Please answer the following below, thank you!

Hi there! Welcome to the team I'm Kelly, the junior accountant here at Mountain Sports I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the owner D A C Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) H Note from Kelly, the junior accountant: there! Welcome to the team. I'm Keily, the junior accountant here at Mountain Sports I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the owners. Anyway, I am quite comfortable with preparing a traditional income statement (this is the income statement learned to prepare in financial accounting). However, the owners are interested in quite a few CVP concepts. I learned about these in my introductory managerial accounting course but it's been awhile. Could you help me classify each of the operating expenses as variable or fixed expenses (Part A below? After that, I think it would be helpful to prepare a CVP Income statement (Part 8B) so that those other concepts (like break-ever, margin of safety etc) can be calculated (Part C). My mom thought it would be a great idea to present these calculations along with detailed explanations to all of the owners since three of the owners aren't actively involved in the day to day operations of the business. Oh, I should tell you the owners do not have an accounting background so we have to explain those CVP concepts in a way that they can understand. Thanks so much for your help! 4 5 6 Mountain Sports Ltd. 7 Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 mark) 9 20 Sales Required: Classify each of the below operating expenses as variable or fixed. 1,782,918 717,567 Variable or Fixed Cost 11 Cost of goods sold 12 Gross margin 1,045,351 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 13 Operating expenses (See notes) 14 Advertising 104,000 To be calculated by the group Monthly Salaries 15 22,280 Depreciation Commission as a percentage of sales 11% 36 Property taxes 34,478 Rent components 17 Rent 113,488 Monthly Percentage of sales 5,000 3% 18 Parts & service expenses 94,042 19 Saares and commissions 194,917 Utilities costs incurred are independent of sales volume they will not change if sales volume changes) brand can be traced to each product in Foring Sys 0 - You Swart M xf Hi there! Welcome to the team. I'm Kelly, the junior accountant here at Mountain Sports. I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the B C D G H 5 6 Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 marks) Required: Classify each of the below operating expenses as variable or fixed. Cost 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 Rent components Monthly Percentage of sales 5,000 3% Utilities costs incurred are independent of sales volume (they will not change if sales volume changes) Parts and Service expense varies with sales activity and can be traced to each product line. The company uses straight-Ine 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 Segment (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes Accessories 734,066 $ Parts & Service 287,590 $ 138,215 Sales $ 623,047 5 Part 8: CVP Income Statement (Chapter 6) (13 marks) Prepare a contribution margin income statement (below), using the traditional income statement provided and the cost information nemdded in Part & Cherk fieures have been evided to ensure unu are on the right track See the word document muiden 8 9 10 Sales 11 Cost of goods sold 12 Gross margin 13 Operating expenses: (See notes) 14 Advertising 15 Depreciation 16 Property taxes 17 Rent 18 Parts & service expenses 19 Salaries and commissions 20 Utilties 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 26 Net income ERRRRR30R 27 28 29 1,782,918 717,567 1,065,351 104,000 22,280 34,478 113,488 94,042 394,917 103,297 866,502 198,849 7,000 191,849 49,881 141.969 H 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 TOTAL PERCENT Sales $1,782,918 Less: Variable Costs (must be listed in alphabetical order): Total variable costs Less: Fixed Costs (must be listed in alphabetical order) Advertising TOTAL 100% Note from Instructor: All formulas 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 all calculations in the case study. Note from Instructor: You will be marked as incorrect if you do not follow instructions! Please read carefully! 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 an 14 accountant can understand. For example, if you calculate a breakeven point of $1,000, what does $1,000 mean? Marks will not be awarded for textbook definitions 45 Calodato Explanation 1) Breakeven Point in Sales Dollars 3) Margin of Safety (in percent) 67 3) Degree of Operating Leverage (DOL) (operating income to be used in calculation) (4 4) The junior accountant left a note for your N/A ne calculations needed in the managerial accounting course that I took, I learned that degree of operating inverage is a mesure of nok don't really understand that Can you help me? What does leverage mean? Is it better to have high leverage or low leverage? The owners have asked me if they should focus more on variable costs or fed costs what should I say? They expect that sales will increase next year Nate from instructor You may increase the son of the columns, however, dos change the formatting. Do not mege the In other question column but again, please de increase the si net merge any cel Hi there! Welcome to the team I'm Kelly, the junior accountant here at Mountain Sports I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the owner D A C Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) H Note from Kelly, the junior accountant: there! Welcome to the team. I'm Keily, the junior accountant here at Mountain Sports I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the owners. Anyway, I am quite comfortable with preparing a traditional income statement (this is the income statement learned to prepare in financial accounting). However, the owners are interested in quite a few CVP concepts. I learned about these in my introductory managerial accounting course but it's been awhile. Could you help me classify each of the operating expenses as variable or fixed expenses (Part A below? After that, I think it would be helpful to prepare a CVP Income statement (Part 8B) so that those other concepts (like break-ever, margin of safety etc) can be calculated (Part C). My mom thought it would be a great idea to present these calculations along with detailed explanations to all of the owners since three of the owners aren't actively involved in the day to day operations of the business. Oh, I should tell you the owners do not have an accounting background so we have to explain those CVP concepts in a way that they can understand. Thanks so much for your help! 4 5 6 Mountain Sports Ltd. 7 Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 mark) 9 20 Sales Required: Classify each of the below operating expenses as variable or fixed. 1,782,918 717,567 Variable or Fixed Cost 11 Cost of goods sold 12 Gross margin 1,045,351 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 13 Operating expenses (See notes) 14 Advertising 104,000 To be calculated by the group Monthly Salaries 15 22,280 Depreciation Commission as a percentage of sales 11% 36 Property taxes 34,478 Rent components 17 Rent 113,488 Monthly Percentage of sales 5,000 3% 18 Parts & service expenses 94,042 19 Saares and commissions 194,917 Utilities costs incurred are independent of sales volume they will not change if sales volume changes) brand can be traced to each product in Foring Sys 0 - You Swart M xf Hi there! Welcome to the team. I'm Kelly, the junior accountant here at Mountain Sports. I've been working with the company for awhile now, helping out with the bookkeeping My mom is one of the B C D G H 5 6 Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 marks) Required: Classify each of the below operating expenses as variable or fixed. Cost 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 Rent components Monthly Percentage of sales 5,000 3% Utilities costs incurred are independent of sales volume (they will not change if sales volume changes) Parts and Service expense varies with sales activity and can be traced to each product line. The company uses straight-Ine 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 Segment (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes Accessories 734,066 $ Parts & Service 287,590 $ 138,215 Sales $ 623,047 5 Part 8: CVP Income Statement (Chapter 6) (13 marks) Prepare a contribution margin income statement (below), using the traditional income statement provided and the cost information nemdded in Part & Cherk fieures have been evided to ensure unu are on the right track See the word document muiden 8 9 10 Sales 11 Cost of goods sold 12 Gross margin 13 Operating expenses: (See notes) 14 Advertising 15 Depreciation 16 Property taxes 17 Rent 18 Parts & service expenses 19 Salaries and commissions 20 Utilties 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 26 Net income ERRRRR30R 27 28 29 1,782,918 717,567 1,065,351 104,000 22,280 34,478 113,488 94,042 394,917 103,297 866,502 198,849 7,000 191,849 49,881 141.969 H 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 TOTAL PERCENT Sales $1,782,918 Less: Variable Costs (must be listed in alphabetical order): Total variable costs Less: Fixed Costs (must be listed in alphabetical order) Advertising TOTAL 100% Note from Instructor: All formulas 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 all calculations in the case study. Note from Instructor: You will be marked as incorrect if you do not follow instructions! Please read carefully! 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 an 14 accountant can understand. For example, if you calculate a breakeven point of $1,000, what does $1,000 mean? Marks will not be awarded for textbook definitions 45 Calodato Explanation 1) Breakeven Point in Sales Dollars 3) Margin of Safety (in percent) 67 3) Degree of Operating Leverage (DOL) (operating income to be used in calculation) (4 4) The junior accountant left a note for your N/A ne calculations needed in the managerial accounting course that I took, I learned that degree of operating inverage is a mesure of nok don't really understand that Can you help me? What does leverage mean? Is it better to have high leverage or low leverage? The owners have asked me if they should focus more on variable costs or fed costs what should I say? They expect that sales will increase next year Nate from instructor You may increase the son of the columns, however, dos change the formatting. Do not mege the In other question column but again, please de increase the si net merge any cel