Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business And Professional Ethics

Authors: Leonard J Brooks, Paul Dunn

8th Edition

1337514462, 9781337514460

More Books

Students also viewed these Accounting questions

Question

25.0 m C B A 52.0 m 65.0 m

Answered: 1 week ago