Lurvey Men's Clothing's revenues and cost data for 2017 are as follows: LOADING...(Click the icon to view the data.) Mr. Lurvey, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $ 25 comma 000 variable costs, which vary with sales volume, and $ 5 comma 000 (fixed) costs

Revenue 500,000

cost of goods sold 250,000

gross margin 250,000

operating cost

salaries fixed 130,000

sales commissions (10% of sales) 50,000

depreciation on eqip. and fixtures 13,000 283,000

operating income (loss) (33,000)

store rent (5000 per month) 60,000

other operating cost 30,000

1. Compute the contribution margin of Lurvey Men's Clothing.

2. Compute the contribution margin percentage.

3. Mr. Lurvey estimates that he can increase units sold, and hence revenues by 20% by incurring additional advertising costs of $ 9 comma 000. Calculate the impact of the additional advertising costs on operating income.

4. What other actions can Mr. Lurvey take to improve operating income?