Refer to Exhibit  2.11.

Data From Exhibit 2.11:

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 Journal’s ad campaign and as a result Universal  sells 65,000 jerseys. Prepare the contribution format income statement for the year.

Transcribed Image Text:

A B 1 Universal Sports Exchange Income Statement 3 for the 52 weeks ended January 30, 2021 Per Unit $ 30.00 5 Ratio 6 Sales 7 Less: variable expenses $1,620,000 100% 8 Cost of goods sold $ 1,188,000 22.00 73% 9 Sales commissions 81,000 1.50 5% 10 Tags 27,000 0.50 2% 11 Total variable expenses 1,296,000 24.00 80% 12 Contribution margin 324,000 $ 6.00 20% 13 Less: fixed expenses 14 Selling 145,000 15 Administrative 95,000 16 Total fixed expenses 240,000 17 Operating income 2$ 84,000 2.