Problem:
For a recent year, Wicker Company had the following sales and expenses:
Sales $14,700
Food and packaging $4,133
Payroll 3,700
Occupancy (rent, depreciation, etc.) 4,327
General, selling, and administrative expenses 2,100
$14,260
Income from operations $440
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
Q1. What is Wicker Company's contribution margin?
Q2. What is Wicker Company's contribution margin ratio?
Q3. How much would income from operations increase if same-store sales increased by $900 for the coming year, with no change in the contribution margin ratio or fixed costs?