(6) Phillis is considering hiring a part-time employee. Phillis is thinking about having the employee's compensation be completely commission based. The employee would earn 15% of each sales transaction amount. Based on conversations with other business owners, with similar employee situations, Phillis believes this will increase sales by 40%. Note that it is estimated the new employee would be responsible for half of all sales. How would this decision effect Phillis' profitability? Prepare a 12-month contribution margin income statement showing the effects. Round all figures to whole dollars. Background: Phillis Wheatley is an aspiring author and owns a small bookstore (On Imagination) in her community of Twain Harte last year. 2019, was her first year in business and it was a tough one. She finished the year with a net loss of $2,883. She believes she needs to make some changes in the upcoming year in order to be viable and has turned to you for some help. Applicable data is presented below for the prior year: On Imagination Contribution Margin Income Statement For the Year Ended December 31, 2019 $ Sales Variable costs Contribution margin Fixed costs Net Income Jan Feb Mar Apr M Jun Jul May u aSep Aug Sep Oct Nov Dec. Total 6,729 S 9,455 $ 7,477 $13.743 $12.11 $120 2 243315010 $13,450 $11,578 526,170 171,98 1105 5,7684 ,561 2,386 7,75410,593 0,122 13.684 9,711 8.210 706) 15. 0 2,624 3 3,687 .0072 2,916 916 5,362 5.162 4,957 952 6,773 TE T OR 208 ,249 45 10,00 5,830 5.8305,830 5,830 5.00 5.00 5.30 5.8305,830 5,8305.830 580 0 3,206) S (2.143) $ (2.914) $ 468) S 7119435 2 2918 373 $ 581) 541,315) 5 4,376 523 $ Inventory costs are the sole variable cost currently. Fixed costs are made up of rent and website. Rent (includes utilities) Website Total $5,800 30 $5,830 Phillis sells different items at her bookstore and she classifies them into three categories (hardback books, paperback books, and book accessories). The sales mix is 3:2:1 respectively. Sales mix Sales price per unit $24 Item Hardback books Paperback books Accessories Variable costs are 61% of sales price. Background: Phillis Wheatley is an aspiring author and owns a small bookstore (On Imagination) in her community of Twain Harte last year. 2019, was her first year in business and it was a tough one. She finished the vear with a net loss of $2,883. She believes she needs to make some changes in the upcoming year in order to be viable and has turned to you for some help. Applicable data is presented below for the prior year: $ Sales Variable costs Contribution margin Fixed costs Net Income On Imagination Contribution Margin Income Statement For the Year Ended December 31, 2019 Jan Total Feb Mar Apr May Jun Jul Aug Sep Oct 6,729 S 9,455 $ 7,477 $13,748 $12.711 517366 $14.95 $22.412 $15.019 $13,450 $11,578 $20,170 , 1.105 5,768 4 ,561 2,386 7,75410,593 0,122 13.684 9,711 8.210 7.663 15,90 2,624 3.687 2,916 5.362 4957 778 582 00 620 5,249 4.515 10,206 6707 H30 5,830 50 51 5 2 53 530 5,520 5130 50 10 3,206) S (2,143) $ 2.914) $ (468) S (7 9435 2 2918 378 $ (581) 541,315 54,376 523 $ Inventory costs are the sole variable cost currently. Fixed costs are made up of rent and website. Rent (includes utilities) Website Total $5,800 30 $5,830 Phillis sells different items at her bookstore and she classifies them into three categories (hardback books, paperback books, and book accessories). The sales mix is 3:2:1 respectively. Sales mix Sales price per unit 3 $24 Item Hardback books Paperback books Accessories Variable costs are 61% of sales price. (6) Phillis is considering hiring a part-time employee. Phillis is thinking about having the employee's compensation be completely commission based. The employee would earn 15% of each sales transaction amount. Based on conversations with other business owners, with similar employee situations, Phillis believes this will increase sales by 40%. Note that it is estimated the new employee would be responsible for half of all sales. How would this decision effect Phillis' profitability? Prepare a 12-month contribution margin income statement showing the effects. Round all figures to whole dollars. Background: Phillis Wheatley is an aspiring author and owns a small bookstore (On Imagination) in her community of Twain Harte last year. 2019, was her first year in business and it was a tough one. She finished the year with a net loss of $2,883. She believes she needs to make some changes in the upcoming year in order to be viable and has turned to you for some help. Applicable data is presented below for the prior year: On Imagination Contribution Margin Income Statement For the Year Ended December 31, 2019 $ Sales Variable costs Contribution margin Fixed costs Net Income Jan Feb Mar Apr M Jun Jul May u aSep Aug Sep Oct Nov Dec. Total 6,729 S 9,455 $ 7,477 $13.743 $12.11 $120 2 243315010 $13,450 $11,578 526,170 171,98 1105 5,7684 ,561 2,386 7,75410,593 0,122 13.684 9,711 8.210 706) 15. 0 2,624 3 3,687 .0072 2,916 916 5,362 5.162 4,957 952 6,773 TE T OR 208 ,249 45 10,00 5,830 5.8305,830 5,830 5.00 5.00 5.30 5.8305,830 5,8305.830 580 0 3,206) S (2.143) $ (2.914) $ 468) S 7119435 2 2918 373 $ 581) 541,315) 5 4,376 523 $ Inventory costs are the sole variable cost currently. Fixed costs are made up of rent and website. Rent (includes utilities) Website Total $5,800 30 $5,830 Phillis sells different items at her bookstore and she classifies them into three categories (hardback books, paperback books, and book accessories). The sales mix is 3:2:1 respectively. Sales mix Sales price per unit $24 Item Hardback books Paperback books Accessories Variable costs are 61% of sales price. Background: Phillis Wheatley is an aspiring author and owns a small bookstore (On Imagination) in her community of Twain Harte last year. 2019, was her first year in business and it was a tough one. She finished the vear with a net loss of $2,883. She believes she needs to make some changes in the upcoming year in order to be viable and has turned to you for some help. Applicable data is presented below for the prior year: $ Sales Variable costs Contribution margin Fixed costs Net Income On Imagination Contribution Margin Income Statement For the Year Ended December 31, 2019 Jan Total Feb Mar Apr May Jun Jul Aug Sep Oct 6,729 S 9,455 $ 7,477 $13,748 $12.711 517366 $14.95 $22.412 $15.019 $13,450 $11,578 $20,170 , 1.105 5,768 4 ,561 2,386 7,75410,593 0,122 13.684 9,711 8.210 7.663 15,90 2,624 3.687 2,916 5.362 4957 778 582 00 620 5,249 4.515 10,206 6707 H30 5,830 50 51 5 2 53 530 5,520 5130 50 10 3,206) S (2,143) $ 2.914) $ (468) S (7 9435 2 2918 378 $ (581) 541,315 54,376 523 $ Inventory costs are the sole variable cost currently. Fixed costs are made up of rent and website. Rent (includes utilities) Website Total $5,800 30 $5,830 Phillis sells different items at her bookstore and she classifies them into three categories (hardback books, paperback books, and book accessories). The sales mix is 3:2:1 respectively. Sales mix Sales price per unit 3 $24 Item Hardback books Paperback books Accessories Variable costs are 61% of sales price