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500,000 Revenues 200,000 Cost of goods sold (all variable costs) Gross margin 300,000 Operating costs: $ 160,000 Salaries fixed Sales commissions (10% of sales) 50,000
500,000 Revenues 200,000 Cost of goods sold (all variable costs) Gross margin 300,000 Operating costs: $ 160,000 Salaries fixed Sales commissions (10% of sales) 50,000 Depreciation on equipment and fixtures 20,000 Store rent ($4,000 per month) 48,000 35,000 313,000 Other operating costs $ (13,000) Operating income (loss) Gwazda Men's Clothing's revenues and cost data for 2017 are as follows (Click the icon to view the data.) Mr. Gwazda, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $20,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs. Read the requirements. Requirement 1. Compute the contribution margin of Gwazda Men's Clothing Determine the formula to calculate the contribution margin, then enter the amounts in the formula to compute the contribution margin of Gwazda Men's Clothing Contribution margin Requirement 2. Compute the contribution margin percentage Determine the formula to calculate the contribution margin percentage, then enter the amounts in the formula to compute the contribution margin percentage. (Enter the result as a whole percentage, XX%.) Contribution margin percentage Requirement 3 Mr. Gwazda estimates that he can increase units sold, and hence revenues by 25% by incurring additional advertising costs of $12,000 Calculate the impact of the additiona advertising costs on operating income. Determine the formula to solve for the amount then complete the formula Change in operating income Requirement 4. What other actions can Mr. Gwazda take to improve operating income? To improve operating income, Mr. Gwazda must find ways to
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