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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.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10E: Contribution margin and contribution margin ratio For a recent year, McDonalds (MCD) company-owned...
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Q. What other actions can Mr. Welch take to improve operating income?

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.
Transcribed Image Text: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.
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