Question
Please explain the steps 1. Kowkeela has recently opened The Cooker Shop, a store that specializes in one type of cooker. Kowkeela has just received
Please explain the steps
1. 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. . . . . . $17
Fixed expenses per year:
Building rental . . . . . . . . . . . . . . $12300
Equipment depreciation . . . . . . $5900
Selling . . . . . . . . . . . . . . . . . . . . . $19200
Administrative . . . . . . . . . . . . . . $18000
(b) [1 mark] In relation to (a), Kowkeelas degree of operating leverage (in two decimal places) is unanswered 5.07
(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 202.94
(d) [1 mark] Refer to the original data, the number of cookers to be sold each year to break even is unanswered 2408.69
(e) [1 mark] Refer to the original data, Kowkeela has decided that she must earn at least $16600 the first year to justify her time and effort. The number of cookers to be sold to reach this target profit is unanswered 3130.43
(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 $7700 per year to convert the part-time position to a full-time position. Kowkeela believes that the change would bring in an additional 605 unit sales each year. If this change is made, the new net income will be
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started