Kowkeela has recently opened The Cooker Shop, a store that specializes in one type of cooker. Kowkeela has just received a degree in business and she is anxious to apply the principles she has learned to her business. In time, she hopes to open a chain of cooker shops. As a first step, she has prepared the following analysis for her new store: Sales price per cooker . . . . . . . . . . . $40 Variable expenses per cooker. . . . . . $19 Fixed expenses per year: - - - Building rental . . . . . . . . . . . . . . $12000 - - - Equipment depreciation . . . . . . $5900 - - - Selling . . . . . . . . . . . . . . . . . . . . . $17600 - - - Administrative . . . . . . . . . . . . . . $16000

(a) [2 marks] During the first year, the store sold only 3100 cookers. Using the space given after question (f) , prepare a contribution approach income statement.

unanswered

(b) [1 mark] In relation to (a), Kowkeelas degree of operating leverage (in two decimal places) is unanswered

(c) [1 mark] In relation to (a), Kowkeela is confident that with a more intense sales effort and with a more creative advertising program she can increase sales by 40% next year. The expected percentage increase in net operating income (in 2 decimal places) is (only input the value not the % symbol) unanswered

(d) [1 mark] Refer to the original data, the number of cookers to be sold each year to break even is unanswered

(e) [1 mark] Refer to the original data, Kowkeela has decided that she must earn at least $16300 the first year to justify her time and effort. The number of cookers to be sold to reach this target profit is unanswered

(f) [1 mark] Refer to the original data, Kowkeela now has two salespersons working in the storeone full time and one part time. It will cost her an additional $6700 per year to convert the part-time position to a full-time position. Kowkeela believes that the change would bring in an additional 654 unit sales each year. If this change is made, the new net income will be $ unanswered

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