Problem 2:Great Plains Cooperative Society

The Great Plains Cooperative Society (GPC) offers a wide range of gourmet foods (including organic foods) as well as an extensive selection of wine at its only store. To deal with rising costs and recent losses, as well as a major cash shortage, the cooperative store is planning to raise prices. The board has assembled the following data:

Gross sales $4,345,800

Cost of goods sold 3,524,600

Store staff salaries 645,320

Store rental & utilities 145,290

Other miscellaneous expenses 97,000

Digging deeper, you find the following additional data:

Wine Groceries

Beginning inventory $284,600 $145,600

Ending inventory 395,340 128,900

Purchases 1,450,240 ?

Sales ? $2,080,000

Moreover, you find that $180,000 of the salaries are directly attributable to groceries and $230,000 to the wine department. The remainder is for persons common to both departments. The store manager informs you that it is not meaningful to separate out the area devoted for wine separately as the aisles and displays are intermingled.

Required:

Make an income statement on EXCEL for GPC - what portion of GPC's income is attributable to Wine and Groceries, respectively? Why do you believe GPC is having difficulties?