3.31 Cost flows in a service firm, cost classifications (LO1, LO2). Brad Timberlake is known throughout the world for his insights on effective and efficient time management. Currently, Brad offers 35 daylong seminars each year at locations throughout North America, Europe, and Asia. The average seminar has 125 participants, each of whom pays a $400 fee. The variable costs (folder, worksheets, copy of Brad's book, and food) amount to $75 per participant. In addition, setting up the seminar itself (the use of a hotel or convention center, hotel staff, and Brad's travel expenses) costs $20,000 per seminar. Finally, Brad pays a coordinator a salary of $50,000 per year to organize his seminars and incurs $250,000 in fixed costs annually to maintain a central office and support staff. Required: a. Preparing a GAAP income statement for Brad's operations, calculate Brad's gross margin and profit before taxes for the year. Remember to classify all administration costs as below the gross margin and all costs connected with offering the seminar above the gross margin. 3.46 Merchandising cost flows, two product lines (LO3). The Great Plains Cooperative Society (GPC) offers a wide range of gourmet foods (including organic foods) as well as an extensive selection of wine at its only store. To deal with rising costs and recent losses, as well as a major cash shortage, the cooperative store is planning to raise prices. The board has assembled the following data: Digging deeper, you find the following additional data