Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are as tollows: Revenues $600,000 300,000 300,000 Cost of goods sold (all variable costs) Gross margin Operating costs: Salaries fixed $140,000 72,000 Sales commissions (12% of sales) Depreciation of equipment and fixtures Store rent ($3,500 per month) Other operating costs Operating income (loss) 10,000 42,000 309,000 $ (9,000) 45,000 Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $30,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs.

Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are as tollows: Revenues $600,000 300,000 300,000 Cost of goods sold (all variable costs) Gross margin Operating costs: Salaries fixed $140,000 72,000 Sales commissions (12% of sales) Depreciation of equipment and fixtures Store rent ($3,500 per month) Other operating costs Operating income (loss) 10,000 42,000 309,000 $ (9,000) 45,000 Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $30,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Given: The annual accounting data for 2018, presented below. : 1500K$ : 1000K$ Fixed factory overhead : 300K$ Variable factory overhead: 200KS Fixed admin costs : 500K$ Variable admin costs : 250KS : 400K$ 50KS :6000K$ Direct material Direct labour Sales salaries Sales commissions Sales Revenues Required: Write an income statement for the data given above, using a) the gross margin technique, and b) the contribution margin technique
3-22 Contribution margin, decision making. (LO 2) Welch Men's Clothing's revenues and cost data for 2021 are as follows: Revenues Cost of goods sold (all variable costs) Gross margin Operating costs: Salaries fixed Sales commissions (12% of sales) Depreciation of equipment and fixtures Store rent ($3,500 per month) Other operating costs Operating income (loss) $140,000 72,000 10,000 42,000 45,000 $600,000 300,000 300,000 309,000 $ (9,000) Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $30,000 variable costs, which vary with sales volume, and $15,000 (fixed) costs. Required 1. Compute the contribution margin of Welch Men's Clothing. 2. Compute the contribution margin percentage. 3. Mr. Welch estimates that he can increase units sold, and hence revenues by 25%, by incurring additional advertising costs of $8,000. Calculate the impact of the additional advertising costs on operating income. 4. What…
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