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Comparative Income Approach - Sales Less variable expenses: Manufacturing expenses Shipping Commissions Keep Digital Watches $ 500,000 120,000 5,000 Drop Digital Watches Difference $

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Comparative Income Approach - Sales Less variable expenses: Manufacturing expenses Shipping Commissions Keep Digital Watches $ 500,000 120,000 5,000 Drop Digital Watches Difference $ $ (500,000) 75,000 Total variable expenses 200,000 120,000 5,000 75,000 200,000 Contribution margin 300,000 (300,000) Less fixed expenses: General factory overhead 60,000 60,000 Salary of line manager 90,000 90,000 Depreciation 50,000 50,000 Advertising - direct 100,000 100,000 Rent - factory space General admin. expenses Total fixed expenses Net operating loss $ (100,000) 70,000 70,000 30,000 30,000 400,000 140,000 260,000 $ (140,000) $ (40,000)

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