Refer to Exhibit 2-11 on page 65.

Required
a. What is Universal Sports Exchange's operating profit equation?
b. If Universal Sports Exchange sells 55,000 jerseys, what total expense will be reported on the income statement?
c. The Daily News Journal has approached Martin Keck, Universal's vice president for sales, with a $20,000 annual ad campaign. If Martin accepts the ad campaign, what will change in Universal's operating profit equation?
d. Assume that Martin Keck accepts the Daily News' ad campaign and as a result Universal sells 60,000 jerseys. Prepare the contribution format income statement for theyear.

UNIVERSAL SPORTS EXCHANGE Income Statement 52 Weeks Ended February 1, 2014 Per Unit Ratio Sales $1,039,500 $20.00 100% Less: variable expenses Cost of goods sold Sales commissions $769,230 62,370 14.80 1.20 16.00 $4.00 6% 80% 20% Total variable expenses 831,600 207,900 Contribution margin Less: fixed expenses Selling Administrative 116,500 51,500 Total fixed expenses Operating income 168,000 $ 39,900