Victor's Sporting Goods is a retailer of sporting equipment. Last year, Victor's sales revenues totalled $5,800,000. Total expenses were $2,600,000. Of this amount, approximately $1,088,000 were variable, while the remainder were fixed. Since Victor's Sporting Goods offers thousands of different products, its managers prefer to calculate the break-even point in terms of sales dollars rather than units. Requirements Requirement 1. What is Victor's Sporting Goods' current operating income? (Prepare a contribution margin format income statement.) Complete the contribution margin income statement. (Enter losses with a minus sign or parentheses.) Victor's Sporting Goods Contribution Margin Income Statement For the Year Ended December 31 Sales revenue Less: Variable expenses Contribution margin Less: Fixed expenses Operating income (loss) Requirement 2. What is Victor's contribution margin ratio? Begin by identifying the formula to compute the contribution margin ratio. Requirements Contribution margin ratio 1. What is Victor's current operating income? (Prepare a contribution margin format income statement.) 2. What is Victor's contribution margin ratio? 3. What is Victor's break-even point in sales dollars? (Hint: The contribution margin ratio calculated in requirement 2 is already weighted by Victor's actual sales mix.) 4. Victor's top management is deciding whether to embark on a $200,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 14% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on Victor's annual operating income? The contribution margin ratio is (Round your answer to two decimal places.) Requirement 3. What is Victor's break-even point in sales dollars? (Hint: The contribution margin ratio calculated in requirement 2 is already weighted by Victor's actual sales mix.) Begin by identifying the formula to compute the break-even point in sales dollars. |= Break-even sales in dollars The break-even point in sales dollars is $ . (Round your answer up to the nearest whole dollar.) Print Done Requirement 4. Victor's top management is deciding whether to embark on a $200,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 14% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on Victor's annual operating income? If Victor's embarks on this advertising campaign, sales revenue and variable costs will by %, which will cause the contribution margin to by %. Fixed costs will by $ due to the advertising campaign. What effect would this advertising campaign have on Victor's annual operating income? The effect would be operating income of $