Revenues Income Statement for Most Recent Year of Operation Cost of goods sold (COGS) Gross margin Selling, general, and administrative expenses (SG&A) Profit before tax Source: All exhibits created by author. $1,837,200 1,274,000 563,200 345,000 $ 218,200 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 Aug 1,200 $112,000 Sep 1,210 $130,000 Oct 1,600 $ 143,000 Nov 1,700 $ 148,000 Dec 1,850 $ 143,000 Cost Direct material Direct labor Rent Depreciation Electricity Other manufacturing Selling Sales commission Administrative Exhibit 3 JW Sports Supplies (A) Description Description of Costs 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. Cost of paying workers who make the gym bags. Amount paid to lease the facility where the gym bags were made. gym bags. Cost of the equipment used in making the Cost obtained from the monthly utility bill for power to provide lighting and operate machinery. 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). Fixed salary paid to sales representative. Amount paid to sales representative for each gym bag sold. General and administrative costs (e.g., purchasing, accounting, payroll). Exhibit 4 JW Sports Supplies (A) Monthly Costs at Different Volume Levels Cost category Units produced and sold 1,200 1,900 Direct material $ 36,000 $ 57,000 Direct labor 18,000 28,500 Rent 5,000 5,000 Depreciation 4,000 4,000 Electricity 4,400 5,800 Other manufacturing 19,600 21,700 Selling 8,000 8,000 Sales commission 12,000 19,000 Administrative 5,000 5,000 5 Prepare a workable contribution income statement that contains a data box that links to your formulas in 2, 3, and 4 with production/sales at 18,372 units for the year, and a selling price of $100 per unit. (Hint: It should match Exhbit 1) 6 How many units need to be sold per month to break even at a price point of $100? Data Production/Sales 18,372 units Salling price per unit 100 Direct Material Direct Labor Rent 30 15 5,000 Depreciation 4,000 Electricity 2 Other Manufacturing 3 Selling 8,000 Sales Commission 10 Administrative 5,000 Months 12 JW Sports Supply Contributed Annual Income Statement For Year Ended December 31, 2021 Revenues $ 1,837,200 Variable Costs Direct Material 551,160 Direct Labor 275,580 Electricity 36,744 Other Manufactoring 55,116 Sales Commision 183,720 Total 1,102,320 Contribution Margin 734,880 Fixed Expenses Rent 60,000 Revenues JW Sports Supply Contributed Annual Income Statement For Year Ended December 31, 2021 Cost of goods sold (COGS) Gross Margin Selling, general, and admin. expenses (SG&A) Profit before tax 2 For each cost in case Exhibit 3, indicate whether the cost is a manufacuring or nonmanufacturing cost. 3 Case Exhibit 4 presents the costs from Exhibit 3 at two levels of production/sales: 1,200 units and 1,900 units. For each cost, indicate whether it is a variable cost, a fixed cost, or a mixed cost and provide the formula for each. 4 Turn your data into a table, and explain to James and William what the significance of your resutls for 2 and 3 above is. Exhibit 4 JW Sports Supplies (A) Monthly Costs at Different Volume Levels Units Produced and Sold Formula Cost Category 1200 1900 Manufacturing? Cost Behavior Y = m X + b Direct Material $ 36,000 $ 57,000 Yes Variable y = 30 + Direct Labor 18,000 28,500 Yes Variable y = 15 X + Rent 5,000 5,000 Yes Fixed y = X + 5,000 Depreciation 4,000 4,000 Yes Fixed y = - X + 4,000 Electricity 4,400 5,800 yes Mixed y = Other Manufacturing 19,600 21,700 Yes Mixed y = 23 + 2,000 X + 16,000 Selling 8,000 8,000 No Fixed y = X + 8,000 Sales Commission 12,000 19,000 No Variable y = 10 X + Administrative 5,000 5,000 No Fixed y = + 5,000 $ 112,000 $ 154,000 60 40,000