a. What is Sports-Strength's operating profit equation? b. How many jerseys has Sports-Strength sold during the year? If it has sold 10% less than it had expected, how many jerseys had it planned to sell? Assuming a 30% tax rate, how much more income after tax would the extra 10% of sales have generated? c. If Sports-Strength sells 55,000 jerseys what total expense will be reported on the income statement? d. The Messenger, a local newspaper, has approached Martin Cole with a $20,000 annual ad campaign. If Martin accepts the ad campaign, what will change in Sports-Strength's operating profit equation? e. Assume Martin Cole accepts The Messenger's ad campaign and as a result Sports-Strength sells 60,000 jerseys next year. Prepare a contribution format income statement for the year.

ACCT6004_Assessment 2 Brief - PDF-XChange Editor Quick Launch (Ctrl+.) Q X File Home View Comment Protect Form Organize Convert Share Review Bookmarks Help Find...Search. ACCT6004_Assessment 2 Brief X !Problems were detected with the document. You may save a copy to correct them. i Show Problem Details. Save As.. Martin Cole, senior sales director at Sports-Strength was reviewing the latest corporate income statement prior to meeting with the company's chief financial officer. "I don't understand these numbers", Martin thought. "We fell short of our projected sales volume of jerseys by 10%, so I was anticipating net income to be 10% lower than expected as well. But that's not what the numbers are showing. How can I use this information to help me plan for the coming year?" The company had been preparing absorption costing income statements, which it used for external reporting. To shed some light on the situation, the new internal accountant prepared an additional income statement using variable costing - a contribution format income statement for the year. SPORTS-STRENGTH INCOME ST (CONTRIBUTION FORMAT) Year ended 30th July 2021 Per Unit Ratio Sales $1,039,500 $20.00 100% Less: variable expenses Cost of $769,230 14.80 74% goods sold Sales commissions 62,370 1.20 6% Total variable 831,600 16.00 80% expenses Contribution margin 207,900 $4.00 20% Less: fixed expenses Selling 116,500 Administrative 51,500 Total fixed expenses 168.000 Operating income $39.900 Exhibit 2- Sports-Strength's Contribution Format Income Statement For simplicity, assume that Sports-Strength sell only one product, soccer jerseys. Sports-Strength buys each jersey from J&B for $14.80 and sells it for $20. Sports- Strength pays a fixed wage and 6% commission to sales staff. Options... W: 209.9mm _ X : 192.9mm ... H: 297.0mm| FY: 177.7mm (K >1 + OROORR, 78% + Type here to search FOF 3:37 PM ^ (() DENG 10/11/2021