Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are as tollows: Revenues $600,000 300,000 300,000 Cost of goods sold (all variable costs) Gross margin Operating costs: Salaries fixed $140,000 72,000 Sales commissions (12% of sales) Depreciation of equipment and fixtures Store rent ($3,500 per month) Other operating costs Operating income (loss) 10,000 42,000 309,000 $ (9,000) 45,000 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.

Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are as tollows: Revenues $600,000 300,000 300,000 Cost of goods sold (all variable costs) Gross margin Operating costs: Salaries fixed $140,000 72,000 Sales commissions (12% of sales) Depreciation of equipment and fixtures Store rent ($3,500 per month) Other operating costs Operating income (loss) 10,000 42,000 309,000 $ (9,000) 45,000 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Q1. Compute the contribution margin of Welch Men’s Clothing.

Contribution margin, decision making. Welch Men's Clothing's revenues and cost data for 2017 are
as tollows:
Revenues
$600,000
300,000
300,000
Cost of goods sold (all variable costs)
Gross margin
Operating costs:
Salaries fixed
$140,000
72,000
Sales commissions (12% of sales)
Depreciation of equipment and fixtures
Store rent ($3,500 per month)
Other operating costs
Operating income (loss)
10,000
42,000
309,000
$ (9,000)
45,000
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.

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