Traditional Format 2016 2017 2018

Net sales$135,987$177,866$232,887

Operating expenses

Cost of sales88,265111,934139,156

Fulfillment17,61925,24934,027

Marketing7,23310,06913,814

Technology and content16,08522,62028,837

General and administrative2,4323,6744,336

Other167214296

Total operating expenses131,801173,760220,466

Operating Income$4,186$4,106$12,421

1. using the income statement above assume : Assume that Amazon's fulfillment expenses are 80% variable and 20% fixed.Amazon's annual report indicates that marketing expenses are largely variable, and general and administrative expenses are largely fixed - using this make a contribution income statement. Discuss the trend in the contribution margin (dollars), and likely reasons for this trend.
2. calculate the contribution marginratiofor each of the last three years. (Carry your computations to 5 decimal places.) What is the trend in the contribution margin ratio, and what are likely reasons for the changes in this ratio? What insight does this ratio provide for analyzing the trend in the dollar magnitude of the contribution margin from question 2?
3. What is the breakeven point for operations,measured in sales dollars, for each of the last three years? What is the trend in the breakeven point? Calculate the margin of safety for each of the last three years, in both absolute sales dollars and as a percentage of sales. Analyze the over-time changes.