Edwards & Shaw is a merchandising company that is the sole distributor of a prod
ID: 2431014 • Letter: E
Question
Edwards & Shaw is a merchandising company that is the sole distributor of a product that is increasing in popularity. The company’s income statement for the three most recent months is listed below.
Edwards and Shaw
Income Statement
For the Three Months Ending September
July
August
September
Sales in Units
4,500
5,000
6,000
Sales Revenue
$675,000
$750,000
$900,000
Cost of Goods Sold
275,000
300,000
350,000
Gross Margin
400,000
450,000
550,000
Operating Expenses:
Advertising Expense
11,000
11,000
11,000
Shipping Expense
27,000
30,000
36,000
Salaries and Commissions
127,500
135,000
150,000
Legal Expense
7,000
7,000
7,000
Depreciation Expense
10,000
10,000
10,000
Total Operating Expenses
182,500
193,000
214,000
Operating Income
$217,500
$257,000
$336,000
Give one example of how Edwards and Shaw could increase projected operating income without increasing total sales revenue.
July
August
September
Sales in Units
4,500
5,000
6,000
Sales Revenue
$675,000
$750,000
$900,000
Cost of Goods Sold
275,000
300,000
350,000
Gross Margin
400,000
450,000
550,000
Operating Expenses:
Advertising Expense
11,000
11,000
11,000
Shipping Expense
27,000
30,000
36,000
Salaries and Commissions
127,500
135,000
150,000
Legal Expense
7,000
7,000
7,000
Depreciation Expense
10,000
10,000
10,000
Total Operating Expenses
182,500
193,000
214,000
Operating Income
$217,500
$257,000
$336,000
Explanation / Answer
Edwards and Shaw could increase projected operating income without increasing total sales revenue by reducing operating expenses. Such as Edwards and Shaw could reduce expenses such as Advertising Expense or Shipping Expense and therby increase operating income
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.