The following data are excerpted from the annual report of Lands€™ End:

Required:
a. Discuss three factors that determine the level of sales and the level of gross profit as a percentage of sales in the context of the operations of Lands€™ End.
b. Interpret the gross profit percentage (45% in fiscal Year 9) in simple terms and in the context of Lands€™ Ends operations.
c. Catalog mailing costs constitute a large percentage of the selling, general, and administrative costs for Lands€™
End. These costs have risen steadily as a percent of sales (only 32.4% in fiscal Year 4). Discuss drivers (determinants) of total catalog mailing costs and indicate ways that Lands€™ End can control these costs. With each suggestion, indicate how the level of sales might beaffected.

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Year 7 Year 5 Year 9 100% 45.0 3.0 Year 8 For the period ended Net sales Cost of sales Gross profit Selling, general, and administrative 39.7 Other expenses.. Net income. Year 6 100% 53.4 46.6 38.8 2.7 5.1% 100% 54.5 45.5 37.9 100% 57.0 43.0 38.0 2.0 3.0% 100% 57.6 42.4 36.0 . 55.0 2.3% 4.6% 3.6%