Information Resources, Inc. (IRI), collects data on consumer packaged goods at 32,000 scanner checkout counters and in panel surveys of 70,000 households. IRI records indicate that department store-brand pantyhose sell for a gross margin of 43 percent and a contribution margin of 29 percent, and the store inventory turns over 14 times per year.
a. What expenses explain the difference between 43 percent and 29 percent?
b. What percentage change in unit sales is required to increase total contributions if price is cut by 10 percent?
c. Compare store-brand pantyhose with the products in Table. Why should Whitman€™s Sampler sell for a contribution margin of 54 percent when pantyhose sell for 29percent?

RALPH LAUREN POLO GOLF SHIRTS (PER COLOR, PER STORE, PER DAY) UNIT QUANTITY UNIFORM TOTAL REVENUE MARGINAL VARIABLE OPERATING CUMULATIVE PRICE $50.00 $48.00 $46.00 $45.00 $44.00 $42.00 $40.00 $38.31 $36.50 S34.50 S32.70 S30.91 $29.17 $27 46 $25.79 $24.07 $22.50 2082 $19.28 REVENUE $0.00 $48.00 SOLD PROFIT PROFIT S0.00 48.00 $92.00 S135.00 $176.00 $210.00 $240.00 S268.17 $292.00 $311.00 $327.00 $340.00 $350.00 $357.00 $361.00 COST S28.00 $28.00 $28.00 $28.00 $28.00 $0.00 $20.00 36.00 51.00 S64.00 $70.00 $72.00 72.00 $0.00 $16.00 $15.00 S13.00 $43.00 $41.00 $34.00 $30.00 $28.00 $24.00 $19.00 $16.00 $13.00 $10.00 S7.00 $4.00 $0.00 (S1.00) ($4.00) ($7.00) 5 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $2.00 $0.00 ($4.00) ($9.00) ($12.00) ($15.00) ($18.00) ($21.00) ($24.00) ($28.00) ($29.00) ($32.00) ($35.00) $59.00 $47.00 $14.00 ($15.00) ($39.00) ($67.00) (S96.00) ($128.00) ($163.00) 15 $360.00 $354.00 $347.00 $28.00 $28.00