there is something wrong with my calculation. can you check it out, please
The contribution margin should be 780213, 41%
and the operating income should be 268396
Mountain Sports Ltd. Income Statement For the Year Ended Dec 31, 2019 Sales Cost of goods sold Gross margin 1,903,819 743,838 1,159,981 Operating expenses: (See notes) Advertising Depreciation Property taxes Rent Parts & service expenses Salaries and commissions Utilities Total operating expenses Operating income Interest expenses Income before taxes Income taxes Net income 106,000 20,787 33,984 93,115 94,255 441,398 102,046 891,585 268,396 7,000 261,396 58,657 202,739 Part A: Cost Classification (Chapter 2, 6) (5 marks) Variable or Fixed Variable Fixed Variable Required: Classify each of the below operating expenses as variable or fixed. Cost 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 Q2 tab for segmented income statement and sales for this department) Monthly Salaries To be calculated by the group Commission as a percentage of sales 13% Rent components: Monthly 3,000 Percentage of sales 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-line 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. Fixed Fixed Fixed Variable Fixed Fixed Fixed Note 1: Sales by Department (taken from Q2 segmented income statement) Cross Country Ski Packages Mountain Bikes Sales $ 623,901 $ 773,131 $ Accessories Parts & Service 359,876 $ 146,911 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. Ultimately your group will over-write the check figures with formulas, however, it will be your group's responsibility to ensure that you match up the check figures to the original workbook provided. N Mountain Sports Ltd." Contribution Margin Income Statement For the Year Ended Dec 31, 2019 ro in CE TOTAL PERCENT Sales $1,903,819 100% Less: Variable Costs (must be listed in alphabetical order): Cost of Goods Sold 743,838 39.07% Parts & Service expense 94,255 4.95% Note fi You wil follow it Commissions 228,398 12.00% Salaries 213,000 11.19% Total variable costs 1,279,491 67.2% 41.0% Contribution Margin 780,213 Less: Fixed Costs (must be listed in alphabetical order) Advertising 106,000 Depreciation 20,787 Property Taxes Rent Salaries and commissions Utilities Total fixed costs Operating Income Less: Interest Expense Earnings Before Income Taxes Less: Income Taxes Net Income 33,984 93,115 441,398 102,046 797,330 268,396 7,000 261,396 58,657 202,739
