Question
In: Accounting
Mr. Wharton, the owner of the store, is unhappy with the operating results. an analysis of...
Mr. Wharton, the owner of the store, is unhappy with the operating results. an analysis of other operating costs reveals that it includes $40,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs.
|
Revenues |
$500,000 |
|
|
Cost of goods sold (all variable costs) |
250,000 |
|
|
Gross margin |
250,000 |
|
|
Operating costs: |
||
|
Salaries fixed |
$160,000 |
|
|
Sales commissions (11% of sales) |
55,000 |
|
|
Depreciation on equipment and fixtures |
20,000 |
|
|
Store rent ($5,000 per month) |
60,000 |
|
|
Other operating costs |
55,000 |
350,000 |
|
Operating income (loss) |
$(100,000) |
Requirement 1
Determine the formula to calculate the contribution margin, then enter the amounts in the formula to compute the contribution margin of Wharton Mens Clothing
____ - ______ = Contribution Margin
Requirement 2
Compute the contribution margin percentage.
Requirement 3
Mr. Whartron estimates that he can increase units sold, and hence revenues by 20% by incurring additional advertising costs of $15,000. calculate the impact of the additional advertising costs on operating income
Requirement 4
What other actions can Mr. Wharton take to improve operating income?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Mr. Wharton, the owner of the store, is unhappy with the operating results. an analysis of...
Mr. Wharton, the owner of the store, is unhappy with the
operating results. an analysis of other operating costs reveals
that it includes $45,000 variable costs, which vary with sales
volume, and $20,000 (fixed) costs.
Revenues
$450,000
Cost of goods sold (all variable costs)
202,500
Gross margin
247,500
Operating costs:
Salaries fixed
$170,000
Sales commissions (13% of sales)
58,500
Depreciation on equipment and fixtures
11,000
Store rent ($4,000 per month)
48,000
Other operating costs
65,000
352,500
Operating income (loss)
$(105,000)...
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Balance Sheet
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