Flowers Galore (FG) has been in business for several years. FG is open Monday-Friday with hours from 9 a.m. until 6 p.m. Saturdays, FG is open from 9 am until 2 pm. FG is the only flower shop in this small rural town. FG offers custom and pre-made flower arrangements along with an assortment of gifts and greeting cards. Flowers are provided for local weddings, funerals, and other special occasions. Deliveries are offered within a surrounding 20 mile area for special rates (ranging from $5 to $25 depending on the distance).

Anna, the owner of FG, has had the business off and on for the past 5 years. During this period, she sold the business only to get it back a year later when the new owners were unable to make the monthly payments. Anna is now working full time and has hired three part-time employees to operate the business while Anna devotes most of her time to her full-time job. Some of her earnings help keep the business afloat.

For pricing purposes, Anna has marked up flowers 250%, plants 300%, and other items at 200%. FG has been struggling financially to keep afloat in recent months. Despite decent sales, it has been very difficult for Anna to make the monthly payments such as rent, telephone, and utilities. It has not been unusual for the employees to be paid a week or so late. Anna needs some financial advice. She has provided you with some recent information (see appendix attached) that should be useful in answering the following questions:

1. Identify the monthly variable and fixed costs for FG (you might have to use the high-low method to separate mixed costs into variable and fixed components).

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February January March April Revenue Flowers Plants Other (gifts, cards, etc.) delivery revenue Total Revenue Wholesale costs $3,000 675 $6,250 1,035 448 $3,500 630 424 $4,400 855 384 335 400 325 415 380 $4,400 $4,934 $8,148 $5,974 Flowers Plants Other (gifts, cards, etc.) Total Wholesale costs Other costs: Electricity, gas, water $1,200 225 200 1,625 $2,500 345 224 3,069 $1,400 $1,760 285 210 212 192 2,237 1,822 $223 $248 $185 $198 Telephone Rent Employee wages FICA, etc. Insurance 120 120 120 120 800 800 800 800 2,008 2,120 2,040 2,096 200 195 203 192 165 165 165 165 advertising (yellow pages, web, newsp shipping delivery cleaning supplies donations workables (ribbons, greens, baskets, v office supplies merchant account (visa) 65 65 65 65 134 82 116 96 244 311 285 251 70 59 33 56 40 39 46 39 29 24 23 35 13 21 22 52 $4,128 84 73 60 Total other costs $4,247 $4,083 $4,396 Orders Flowers 60 125 70 88 Plants 15 23 14 19 Other (gifts, cards, etc.) 50 56 53 48