Question

X Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations.

Sales (2,000 televisions)$2,000,000

Cost of goods sold 570,000

Store manager's salary per year 130,000

Operating costs per year (100,000 is fixed)280,000

Advertising and promotion per year 32,000

Commissions (2.3% of sales)46,000

What are the estimated net margin if the company expects to sell 3,300 units next year?

Answer 1

Calculation of Net margin if 3300 Units sold next year
	Total	Per Unit
Sales	3,300,000	1,000
Less: Variable cost
Cost of Goods sold	940,500	285
Operating cost	297,000	90
Commisiion	75,900	23
Total Variable cost	1,313,400	398
Contribution Margin	1,986,600	602
Less: Fixed cost
Store manager's salary	130,000
Operating cost	100,000
Adertising and promotion	32,000
Total Fixed cost	262,000
Net Margin	1,724,600