Part 1: The housewares department in a specialty store had net sales of $1,500,000. The gross margin achieved during this time was 34.0%. The direct expenses during the period under consideration were: Buying salaries $125,000 Selling salaries $275,000 Advertising $90,000 Receiving and marking $15,000 Wrapping and packing $10,000 (show all math work) With a GM% of 34.00% and Net Sales of $1,500,000; 1. Calculate the current total expenses dollars and percentage. 2. What is the Net Profit % and Net Profit $ with the current expenses? After reviewing this expense and net profit performance, management decided that expenses must be reduced. The manager was given the choice of either reducing the advertising budget to a maximum of $50,000 or reducing selling salaries by $50,000. Part 2: PLAN A: reduce the advertising budget to a maximum of $50,000 Buying salaries $125,000 Selling salaries $275,000 Advertising $90,000 Receiving and marking $15,000 Wrapping and packing $10,000 Under Plan A: (show all math work) With a GM% of 34.00% and Net Sales of $1,500,000; 1. Calculate the total expenses: 2. Calculate the expenses percentage: 3. What is the net Net Profit % and Net Profit $ with the change in advertising?

Part 3: PLAN B: reduce selling salaries by $50,000 Buying salaries $125,000 Selling salaries $275,000 Advertising $90,000 Receiving and marking $15,000 Wrapping and packing $10,000 Under Plan B : (show all math work) With a GM% of 34.00% and Net Sales of $1,500,000; 1. Calculate the total expenses: 2. Calculate the expenses percentage: 3. What is the new Net Profit % and Net Profit $ with the change in salaries? FINAL RESULTS: 1. Based on results; Which is the best plan of action that would increase profit for the department? Plan A or Plan B 2. Discuss the impact your strategy will have on net profit. (Which plan generated more profit in dollars) Analyze the current profit against each plan 3. Discuss how reducing advertising or cutting sales salaries would impact the customer shopping experience in a retail environment?