Donna Tse has recently accepted the position of assistant manager at Cycle World, a bicycle store in St. Louis. She has just finished her accounting courses. Cycle Worlds manager and owner, Jeff Towry, asks Tse to prepare a budgeted income statement for 20X8 based on the information he has collected. Tses budget follows:

Cycle World
Budgeted Income Statement
For the Year Ended July 31, 20X8
Net Sales Revenue		$ 244,000
Cost of Goods Sold		177,000
Gross Profit		67,000
Selling and Administrative Expenses:
Salaries and Commissions Expense	$ 46,000
Rent Expense	8,000
Depreciation Expense	2,000
Insurance Expense	800
Miscellaneous Expense	12,000	68,800
Operating Loss		(1,800)
Interest Expense		(225)
Net Income (Loss)		$ (2,025)

Tse does not want to give Towry this budget without making constructive suggestions for steps Towry could take to improve expected performance.

Assume the role of Donna Tse. Write a memo to Towry outlining your suggestions.