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1. Horngren et al (2015) Exercise CVP-analysis 3-30 Contribution margin, decision making, margin of safety McCarthy Men's Clothing revenues and cost data for 2016 are
1. Horngren et al (2015) Exercise CVP-analysis 3-30 Contribution margin, decision making, margin of safety McCarthy Men's Clothing revenues and cost data for 2016 are as follows: Mr. McCarthy, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes 28.000,- variable costs, which vary with sales volume, and 4.000,- (fixed) costs. 1. Compute the contribution margin of McCarthy Men's Clothing. 2. Compute the contribution margin percentage. 3. Mr. McCarthy estimates that he can increase units sold, and hence revenues by 15% by incurring additional advertising costs of 12.000,. Calculate the impact of the additional advertising costs on operating income. 4. What is the margin of safety? 5. What other actions can Mr. McCarthy take to improve operating income? Discuss and calculate two scenarios in the paper. Think about the costs of your actions. 6. Evaluate the decision making process in the paper
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