Contribution margin, decision making Lurvey Men's Clothing's revenues and cost data for 2011 are as follows:

Contribution margin, decision making Lurvey Men's Clothing's rev" class="fr-fic fr-dii">

Mr. Lurvey, 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 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 operatingincome.

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Revenues $600,000 Cost of goods sold Gross margin Operating costs: Salaries fixed 300,000 300,000 $170,000 Sales commissions (10% of sales) 60,000 20,000 54,000 Depreciation of equipment and fixtures Store rent ($4,500 per month) Other operating costs Operating income (loss) 45,000 349,000 $ (49,000)