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Contribution margin, decision making.Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows: Revenues $600,000 Cost of goods sold ƒ300,000 Gross margin 300,000 Operating costs: Salaries fixed $170,000 Sales commissions (10% of sales) 60,000 Depreciation of equipment and fixtures 20,000 Store rent ($4,500 per month) 54,000 Other operating costs ƒƒ45,000 ƒ349,000 Operating income (loss) $ƒ(49,000)
Required 1. Compute the contribution margin of Lurvey Men’s Clothing. 2. Compute the contribution margin percentage. 3. Mr. Lurvey estimates that he can increase revenues by 15% by incurring additional advertising costs of $13,000. Calculate the impact of the additional advertising costs on operating income.Contribution margin, decision making.Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows: Revenues $600,000 Cost of goods sold ƒ300,000 Gross margin 300,000 Operating costs: Salarie