The popularity of Sketchers' products has increasedsignificantly in recent years.Sales increased from $1,560.3 millionin 2012 to $2,377.6 million in 2014, for an increase in 52.4percent. In the same period, operating income increased from $22.3million to $209.0 million, for an increase of 83.7 percent. Itshould be noted that this growth was not the result of largeracquisitions of or mergers with other companies. Write a memorandumthat explains how 5 percent increase in sales could cause an 83.7percent increase in profit. Your memo should address the following:a) An identification of the accounting concept involved b) Adiscussion of how various major types of costs incurred bySketchers were likely affected by the increase in sales. c) Theeffect of the increase in sales on Sketchers' margin of safety
The popularity of Sketchers' products has increasedsignificantly in recent years.Sales increased from $1,560.3 millionin 2012 to $2,377.6 million in 2014, for an increase in 52.4percent. In the same period, operating income increased from $22.3million to $209.0 million, for an increase of 83.7 percent. Itshould be noted that this growth was not the result of largeracquisitions of or mergers with other companies. Write a memorandumthat explains how 5 percent increase in sales could cause an 83.7percent increase in profit. Your memo should address the following:a) An identification of the accounting concept involved b) Adiscussion of how various major types of costs incurred bySketchers were likely affected by the increase in sales. c) Theeffect of the increase in sales on Sketchers' margin of safety
