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02 Men's World's Clothing's revenues and cost data for 2017 are as follows: 1 Page Points 10 Revenues $600,000 Cost of goods sold (all variable
02 Men's World's Clothing's revenues and cost data for 2017 are as follows: 1 Page Points 10 Revenues $600,000 Cost of goods sold (all variable costs) 300,000 Gross margin 300,000 Operating costs: Salaries fixed $140,000 Sales commissions (12% of sales) 72,000 Depreciation of equipment and fixtures 10,000 Store rent ($3,500 per month) 42,000 Other operating costs 45,000 Operating income (loss) 309,000 $(9,000) The owner of the store is unhappy with the operating results. An analysis of other operating costs reveals that it includes $30,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs. Required: 2a. Calculate the current Margin of Safety and DOL for Men;s World. And, explain the situation. 2b. The owner estimates that she can increase units sold, and hence revenues by 35% by incurring additional advertising costs of $18,000. Calculate the impact of the additional advertising costs on operating income. 2c. What other actions can Mr. Welch take to improve operating income
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