Assume you are the manager of the flower shop. Choose two areas that you would investigate further because the numbers appear odd. Maybe the numbers increased significantly. Maybe the numbers did not increase enough.

First,explain why you believe the numbers you chose may need further investigation.

Second,give a legitimate reason why the numbers appear as they do.

Example: Assume the salaries went from $150 in 2019 to $300 in 2020. This appears odd because salary increases are not usually a 100% increase. A cost-of-living salary increase or a 10% raise would be more logical. However, it is possible the company hired additional workers or gave profit-sharing bonuses which could explain the significant increase.

Daisy and Lily's Flower Shop Income Statement For years ended 2020 and 2019 (In thousands) 2020 2019 Sales 8,000 100% 6,000 100% Cost of Goods Sold 6,000 75% 3,900 65% Gross Profit 2,000 25% 2,100 35% Expenses: Advertising 100 1% 50 1% Delivery 50 1% 40 1% Salaries 150 2% 150 3% Rent 450 6% 250 4% Insurance 150 2% 125 2% Utilities 150 2% 100 2% Total expenses 1,050 13% 715 12% Other Income (Expense): Interest Expense 720 9% 450 8% Income Taxes 46 1% 180 3% Net Income 184 2% 755 13% Units Sold 250 250