Question
How would this look on an income statement and what affect would this have on the questions a,b,c, and d im having a rough time
How would this look on an income statement and what affect would this have on the questions a,b,c, and d im having a rough time understanding.
2018 Actual Sales: Online Bike C: 95,000 bikes;Bike A: 4,800 bikes. Total online 99,800 bikes
Instore Bike C: 5,100 bikes; Bike A: 200 bikes. Total instore 5,300 bikes
Bicycle Returns were 2% of online sales.
Sales price:Bike C = $104; Bike A = $250
Purchase price from BRBC: Bike C = $52; Bike A = $125
Inventory:
Beginning Inventory: 1,000 Bike C
Ending Inventory: 1,000 Bike C; 50 Bike A
Staffing changes:
Added 1FTE in Purchasing and receiving
Added one Saturday sales clerk to work 8 hours
Utilities were as budgeted.
Marketing costs increased by $25,000 and other costs increased by $75,000. BRBS is in the 29% tax bracket.
:
a) Only Bike C is budgeted to be sold at BRBS in store. Should Bike A and/or Bike B also be sold? In 2018, an experiment was conducted selling Bike A. Was this a good decision? Should it be continued for 2019? Should other adjustments to sales be
b) Budgeted profit margin is 17%, but the Board expects a 25% margin, so they can continue to give back to the community 10% of instore sales. How can the store increase their profit margin to 25% in 2019?
c) To increase sales the store will need to increase store sales staff. Currently sales staff are paid $15 per hour and receive a bonus of 10% of instore sales (total divided among sales staff). How many additional sales staff will be needed to meet projected sales increases and profit margin for 2019?
d) BRBS is considering starting two bicycle clubs - one leisure and one competitive, in conjunction with the local YMCA. These would be community activities to increase physical activity and fitness, but would also bring awareness of BRBS and potentially increase sales. How would the costs of these activities be shown in the financial statements?
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