20.

Sanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and the economy in addition to new competition Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first step in planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise and experience, she develops the following. Scenario Good Fair Poor Gross Margin per Customer (Price Cost of Goods) $6.8 5.8 1.9 Number of Customers 48,000 38,000 33,000 Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possible scenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs to be $48,000 plus $2 for every customer in excess of 38,000. The marketing and administrative costs are estimated to be $13,500 plus 3 percent of the gross margin Required: Prepare an analysis of the possible operating income for Sanjana similar to that in Exhibit13.15. What is the range of operating incomes? Operating Costs Marketing & Admin Poor Fake Good Poor Fair Good Poor Fair Good Gros Margin $ 19 5 58 5 6.8 $ 1.9 s 50 $ 68 $ 19 $ 5.8 $ Number of Gross Margin Customers 33,000 33,000 33.000 38.000 38.000 38,000 48.000 48.000 48.000 Operating Profit (Loss) $ 0 $ 0 5 0 $ 0 $ 0 $ 0 SE $ 0 0 0 68 $