Think of any major retailer you know. Tell us who your retailer is and tell us what conditions would increase their cost of sales in the income statement and what would decrease it.( explain) As you know an increase in cost of sales results in a decrease in net income and vice versa. here is the example: Marine Corps Exchange (MCX) is a retail organization serving U.S. Marines, the cost of sales is subject to various conditions that can either increase or decrease it, thereby affecting the organization's net income.

Conditions that could increase MCX's cost of sales:

Rising Procurement Costs: A 10% increase in the cost of sourcing specialized military items could result in an additional $1 million in procurement expenses.

Labor Costs: If labor costs increase by 15%, which includes higher wages and increased benefits, this could add $500,000 to the cost of sales.

Inventory Management Issues: Inefficient inventory practices might lead to a 12% increase in carrying costs, resulting in a $750,000 rise in cost.

High Promotion and Advertising Expenses: A 20% spike in marketing costs, due to extensive advertising and promotional campaigns, could contribute an extra $2 million to the cost of sales.

Conditions that could decrease MCX's cost of sales:

Efficient Supply Chain Management: Optimized supply chain processes might reduce procurement and operational costs by 8%, saving $1.2 million.

Negotiating Favorable Supplier Contracts: Securing advantageous supplier agreements could lead to a 5% reduction in procurement costs, resulting in a $750,000 cost savings.

Optimized Inventory Levels: Maintaining optimal inventory levels could lower carrying costs by 10%, saving $1.5 million.

Energy Efficiency: Implementing energy-efficient technologies in stores may reduce utility expenses by 15%, resulting in $200,000 in cost savings.

Numbers and percentages here are purely illustrative and hypothetical, but they illustrate how changes in certain conditions could result in an increase in MCX's cost of sales, and vice versa. The actual figures would vary depending on MCX's unique circumstances and scale.