s and cost data for 2017 are as follows: .) e, is unhappy with the operating results. An analysis of other operating costs reveals that it includ Data Table Requirements Revenues $ 400,000 200,000 Cost of goods sold (all variable costs) 1. Compute the contribution margin of Gwazda Men's Clothing. 2. Compute the contribution margin percentage. 3. Mr. Gwazda estimates that he can increase units sold, and hence revenues by 15% by incurring additional advertising costs of $14,000. Calculate the impact of the additional advertising costs on operating income. 4. What other actions can Mr. Gwazda take to improve operating income? Gross margin 200,000 Operating costs: Salaries fixed $ 160,000 Sales commissions (10% of sales) 40,000 erti Depreciation on equipment and fixtures 18,000 Store rent ($4,000 per month) 48,000 Print Done 30,000 296,000 Other operating costs (96,000) Operating income (loss) 1. Gwazda must find ways to Print Done any number in the input fields and then continue to the next question.
s and cost data for 2017 are as follows: .) e, is unhappy with the operating results. An analysis of other operating costs reveals that it includ Data Table Requirements Revenues $ 400,000 200,000 Cost of goods sold (all variable costs) 1. Compute the contribution margin of Gwazda Men's Clothing. 2. Compute the contribution margin percentage. 3. Mr. Gwazda estimates that he can increase units sold, and hence revenues by 15% by incurring additional advertising costs of $14,000. Calculate the impact of the additional advertising costs on operating income. 4. What other actions can Mr. Gwazda take to improve operating income? Gross margin 200,000 Operating costs: Salaries fixed $ 160,000 Sales commissions (10% of sales) 40,000 erti Depreciation on equipment and fixtures 18,000 Store rent ($4,000 per month) 48,000 Print Done 30,000 296,000 Other operating costs (96,000) Operating income (loss) 1. Gwazda must find ways to Print Done any number in the input fields and then continue to the next question.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Question
Transcribed Image Text:Gwazda Men's Clothing's revenues and cost data for 2017 are as follows:
E (Click the icon to view the data.)
Mr. Gwazda, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $20,000 variable costs, which vary with sales volume, and $10,000 (fixed) costs.
Read the requirements.
Requirement 1. Compute the total contribution margin of Gwazda Men's Clothing. (Not the contribution margin per unit.)
The contribution margin is
Requirement 2. Compute the contribution margin percentage. (Enter the result as a whole percentage, XX%.)
The contribution percentage is
Requirement 3. Mr. Gwazda estimates that he can increase units sold, and hence revenues by 15% by incurring additional advertising costs of $14,000. Calculate the impact of the additional advertising costs on operating inco
Operating income will
by $
Requirement 4. What other actions can Mr. Gwazda take to improve operating income?
To improve operating income, Mr. Gwazda must find ways to
Choose from any list or enter any number in the input fields and then continue to the next question.
Transcribed Image Text:s and cost data for 2017 are as follows:
a.)
e, is unhappy with the operating results. An analysis of other operating costs reveals that it includ
Data Table
Requirements
Revenues
2$
400,000
200,000
Cost of goods sold (all variable costs)
1. Compute the contribution margin of Gwazda Men's Clothing.
2. Compute the contribution margin percentage.
3. Mr. Gwazda estimates that he can increase units sold, and hence revenues by
15% by incurring additional advertising costs of $14,000. Calculate the impact
of the additional advertising costs on operating income.
4. What other actions can Mr. Gwazda take to improve operating income?
Gross margin
200,000
Operating costs:
Salaries fixed
$ 160,000
Sales commissions (10% of sales)
40,000
ert
Depreciation on equipment and fixtures
18,000
Store rent ($4,000 per month)
48,000
Print
Done
30,000
296,000
Other operating costs
(96,000)
Operating income (loss)
Ir. Gwazda must find ways to
Print
Done
any number in the input fields and then continue to the next question.
hp
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