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Please answer the following questions below, thank you! please fill in the blanks 11 Quem Cast Clasfications, CVP income Statement & Aalysis (27 mark Nors
Please answer the following questions below, thank you!
please fill in the blanks
11 Quem Cast Clasfications, CVP income Statement & Aalysis (27 mark Nors from Kelly, the cont Welcome the team mily, the rout here of Mountare se bere working with the company for wts now being out with the bookeeping My mum se of A Anyw am quite confortable with preparing a traditional income statement this is the income statement learned to prepare in funcil anting However, the owners are interested in quite a few teamed about there in my introductory managerial occounting course but it's been awhile Cold you help me classify each of the operating expenses as variable or fed exper Ar tatt it would be hid to prepare a CVP income statement (Port / as that thou offer concepts e break even margin of safety can be coute (PetMy mom thought b pratto present their calculations along with detalt planations to all of the owner since three of the owners aren't actively ind in t ons of the business Oshould tell you the went home an accounting background so we have to explain those EVP concepts in a way that they can understand. Thanks so much for your help Mountain Sports Income Statement For the Year Ended Dec 11, 2019 Part & Cost Cation (Chapter 2, 15 mark Sain Required Glity each of the below operating expemesas variable fixed Cost Variable d Cast of goods sold increases proportionately with sa Emplones are paid fixed monthly salanes supplemented by a commation on all sales except for the Pa Service department's sales te te I below for sales for each ung To be cleated by the group. Monthly Sales Comissionat percentage of se 11% fent com Monthly Percentage of tales Koco 35 usisies costs incurred as independent of sales volume they will not chaneef sales volume chanel Fart and Sentecostas varies with sales actats and can be traced to each oroducti on all depreciable asset The company ses straight line deprecia The property taxes are set by the Oty 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 02 ngmented income statement Cas Country Ski Pachage Mountain Bikes Acces 734066 Sales 423,047 of goods sold 2G margi Operating penses (et) 234 Advertising = Depreciation MA operty tasm Ram Parts & ser expenses Salanes and con Under 20 21 Titalsperating expenses Operating income expenses me before taves mom tam 17 14 19 26 Bet mome 17691 717,547 1.065.355 104,000 22,250 SKATE 113,488 34,043 35431 100 BESA 194.849 7,000 29149 41.881 341500 Parts & Service 247,500 134715 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 1 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! Pat CCVP Analysis (Chapter 6) (marks) Calculate the following and explain each calculation (in your own worth). 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 of $1,000, what does $1,000 mean? Marks will not be awarded for textbook deftion Calculation Explanation Breakeven Point in Sales Dollars 23 Margin of Safety (in percent) 3) Degree of Operating Leverage (DOL) (operating income to be used in calculation 4) The junior accountant left a note for you N/A no calculations needed as the managerial accounting course that I took I learned that degree of operating leverage is a measure of sk. I 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 casts or fixed costs, what should I say? They expect thot sales will increase next year Note from Instructor: You may increase the size of the columns, however, do not change the formatting Do not merge cells in any of the w boses. In other questions, you may need to increase the size of the column but again, please do not merge any cells A 1 Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) H 3 Note from Kelly, the junior accountant Hi there! Welcome to the team I'm Kelly, the junior occountant 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 (PortA below)? After that, i think it would be helpful to prepare a CVP income statement (Part B) so that those other concepts (like break-even, margin of safety etc) can be calculated (Purt 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, 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! Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 marks) 10 Sales Required: Classify each of the below operating expenses as variable or fixed 1,782,918 717,567 11 Cost of goods sold Cost Variable or Fixed 12 Gross margin 1,065,351 Cost of goods sold increases proportionately with sales Employees are paid faxed 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 To be calculated by the group 104,000 Monthly Salaries Commission as a percentage of sales 11% 15 Depreciation 16 Property taxes 22,280 34,478 113,488 Bent components Rent Monthly Percentage of sales 5,000 3% Parts & service expenses 94,042 Salanes and commissions 334,917 103,297 Utilities costs incurred are independent of sales volume they will not change if sales volume changes) Parts and Service experse varies with sales activity and can be traced to each product line The company uses straight-line depreciation on all depreciable assets. 866.502 198,849 7,000 191,849 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. 49,881 Note 1: Sales by Segment (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes 141.969 Accessories 734,066 $ Sales $ 623,047 5 17 18 19 20 Utilities 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 25 Net income Parts & Service 138.215 287,590 5 11 Quem Cast Clasfications, CVP income Statement & Aalysis (27 mark Nors from Kelly, the cont Welcome the team mily, the rout here of Mountare se bere working with the company for wts now being out with the bookeeping My mum se of A Anyw am quite confortable with preparing a traditional income statement this is the income statement learned to prepare in funcil anting However, the owners are interested in quite a few teamed about there in my introductory managerial occounting course but it's been awhile Cold you help me classify each of the operating expenses as variable or fed exper Ar tatt it would be hid to prepare a CVP income statement (Port / as that thou offer concepts e break even margin of safety can be coute (PetMy mom thought b pratto present their calculations along with detalt planations to all of the owner since three of the owners aren't actively ind in t ons of the business Oshould tell you the went home an accounting background so we have to explain those EVP concepts in a way that they can understand. Thanks so much for your help Mountain Sports Income Statement For the Year Ended Dec 11, 2019 Part & Cost Cation (Chapter 2, 15 mark Sain Required Glity each of the below operating expemesas variable fixed Cost Variable d Cast of goods sold increases proportionately with sa Emplones are paid fixed monthly salanes supplemented by a commation on all sales except for the Pa Service department's sales te te I below for sales for each ung To be cleated by the group. Monthly Sales Comissionat percentage of se 11% fent com Monthly Percentage of tales Koco 35 usisies costs incurred as independent of sales volume they will not chaneef sales volume chanel Fart and Sentecostas varies with sales actats and can be traced to each oroducti on all depreciable asset The company ses straight line deprecia The property taxes are set by the Oty 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 02 ngmented income statement Cas Country Ski Pachage Mountain Bikes Acces 734066 Sales 423,047 of goods sold 2G margi Operating penses (et) 234 Advertising = Depreciation MA operty tasm Ram Parts & ser expenses Salanes and con Under 20 21 Titalsperating expenses Operating income expenses me before taves mom tam 17 14 19 26 Bet mome 17691 717,547 1.065.355 104,000 22,250 SKATE 113,488 34,043 35431 100 BESA 194.849 7,000 29149 41.881 341500 Parts & Service 247,500 134715 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 1 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! Pat CCVP Analysis (Chapter 6) (marks) Calculate the following and explain each calculation (in your own worth). 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 of $1,000, what does $1,000 mean? Marks will not be awarded for textbook deftion Calculation Explanation Breakeven Point in Sales Dollars 23 Margin of Safety (in percent) 3) Degree of Operating Leverage (DOL) (operating income to be used in calculation 4) The junior accountant left a note for you N/A no calculations needed as the managerial accounting course that I took I learned that degree of operating leverage is a measure of sk. I 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 casts or fixed costs, what should I say? They expect thot sales will increase next year Note from Instructor: You may increase the size of the columns, however, do not change the formatting Do not merge cells in any of the w boses. In other questions, you may need to increase the size of the column but again, please do not merge any cells A 1 Question 1: Cost Classifications, CVP Income Statement & Analysis (27 marks) H 3 Note from Kelly, the junior accountant Hi there! Welcome to the team I'm Kelly, the junior occountant 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 (PortA below)? After that, i think it would be helpful to prepare a CVP income statement (Part B) so that those other concepts (like break-even, margin of safety etc) can be calculated (Purt 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, 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! Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Part A: Cost Classification (Chapter 2, 6) (5 marks) 10 Sales Required: Classify each of the below operating expenses as variable or fixed 1,782,918 717,567 11 Cost of goods sold Cost Variable or Fixed 12 Gross margin 1,065,351 Cost of goods sold increases proportionately with sales Employees are paid faxed 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 To be calculated by the group 104,000 Monthly Salaries Commission as a percentage of sales 11% 15 Depreciation 16 Property taxes 22,280 34,478 113,488 Bent components Rent Monthly Percentage of sales 5,000 3% Parts & service expenses 94,042 Salanes and commissions 334,917 103,297 Utilities costs incurred are independent of sales volume they will not change if sales volume changes) Parts and Service experse varies with sales activity and can be traced to each product line The company uses straight-line depreciation on all depreciable assets. 866.502 198,849 7,000 191,849 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. 49,881 Note 1: Sales by Segment (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes 141.969 Accessories 734,066 $ Sales $ 623,047 5 17 18 19 20 Utilities 21 Total operating expenses 22 Operating income 23 Interest expenses 24 Income before taxes 25 Income taxes 25 Net income Parts & Service 138.215 287,590 5 Step by Step Solution
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