Wharton Men’s Clothing’s revenues and cost data for 2012 are as follows:

Mr. Wharton, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $ 25,000 variable costs, which vary with sales volume, and $ 10,000 fixed costs.
1. Compute the contribution margin of Wharton Men’s Clothing.
2. Compute the contribution margin percentage.
3. Mr. Wharton estimates that he can increase revenues by 25% by incurring additional advertising costs of $ 15,000. Calculate the impact of the additional advertising costs on operating income.
4. What other actions can Mr. Wharton take to improve operatingincome?

  • CreatedJanuary 15, 2015
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