Dineshbhai Required information[The following information applies to the questions displayed below.]Cardio World Incorporated (CWI) is a sporting goods retailer that specializes in bicycles, running shoes, and relatedclothing. The firm has become successful by careful attention to trends in cycling, running, and changes in the technologyand fashion of sport clothing. In recent years, however, the profit margins have begun to fall, and CWI has decided toemploy a contribution income statement to further analyze the company's profitability. The company has two stores, onein Hartford, Connecticut, and the other in Boston, Massachusetts. The total sales for the two stores for the most recentyear are $6,985,000 and $5,835,000 for the Hartford and Boston stores, respectively. Both stores are considered profitcenters, and within each store are two profit centers: one for clothing and the other for cycle and running shoes(called "cycle & run" below). The breakdown of sales within the two stores is approximately 50% clothing and 50% cycle &run for Boston but is estimated to be 60% / 40% for Hartford due to the greater interest in cycling in the Boston area. CWI isinterested in finding the profit contribution of clothing and cycle & run at the Hartford store but not at the Boston store.Cost of purchases for resale averages 60% of retail value at Boston; at Hartford, the cost is 70% for clothing and 50% forcycle & run. Variable operating costs at each store are similar: 30% of retail sales at Boston, and at Hartford, variableoperating costs are 25% of retail sales for the clothing unit and 35% for the cycle & run unit. CWI estimates it has a total of$1,175,000 fixed cost, of which $405,000 cannot be traced to either store; of the remaining $770,000, $435,000 istraceable to the stores and controllable by store managers, and $335,000 can be traced to the stores but cannot becontrolled in the short term by the store managers. These fixed costs are estimated to be traceable to the stores asfollows:Fixed Controllable CostsBostonHartford totalClothingCycle & runCould not be traced to clothing or cycling at HartfordCould not be traced to Boston or HartfordFixed Noncontrollable CostsBostonHartford totalClothingCycle & runCould not be traced to clothing or cycling at HartfordCould not be traced to Boston or HartfordPercent ofTotal Cost45%4550302010Percent ofTotal Cost40%50 55 35 18 181010Required:1. Prepare a contribution income statement for CWI showing the contribution margin, controllable margin, and contribution by profitcenter for both the Boston and Hartford stores, and also for the clothing and cycle & run units of the Hartford store.

An income statement with a contribution margin shows the contribution margin after all variable…

Could not be traced to Boston or Hartford Fixed Noncontrollable Costs Boston Hartford total Clothing Cycle & run Could not be traced to clothing or cycling at Hartford Could not be traced to Boston or Hartford 10 Percent of Total Cost 40% 50 55 35 18 10 10 Required: 1. Prepare a contribution income statement for CWI showing the contribution margin, controllable margin, and contribution by profit center for both the Boston and Hartford stores, and also for the clothing and cycle & run units of the Hartford store.