Problem 1 (h_35) Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are as follows: Revenues S600,000 Cost of goods sold (all variable costs) 300,000 Gross margin 300,000 Operating costs: Salaries fixed $140,000 Sales commissions (12% of sales) 72,000 Depreciation of equipment and fixtures Store rent ($3,500 per month) 42,000 Other operating costs 45,000 309,000 Operating income (loss) $ 19,000) 10,000 Mr. Welch, 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 Welch Men's Clothing. 2. Compute the contribution margin percentage. 3. Mr. Welch estimates that he can increase units sold, and hence revenues by 25% by incurring additional advertising costs of $8,000. Calculate the impact of the additional advertising costs on operating income. 4. What other actions can Mr. Welch take to improve operating income