The operating cost above 45,000 are wrong

Sanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and the economy in addition to new competition. Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first step in planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise and experience, she develops the following. Scenario Good Fair Poor Gross Margin per Customer (Price - Cost of Goods) $6.5 5.5 1.9 Number of Customers 45,000 35,000 30,000 Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possible scenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs to be $45,000 plus $2 for every customer in excess of 35,000. The marketing and administrative costs are estimated to be $12,900 plus 3 percent of the gross margin. Required: Prepare an analysis of the possible operating income for Sanjana similar to that in Exhibit 13.15. What is the range of operating Incomes? Gross Margin $ 1.9 Poor Fair $ 5.5 Good $ 6.5 Poor $ 1.9 lo Number of Operating Gross Margin Marketing & Operating Customers Costs Admin Profit (Loss) 30,000 $ 57,000 $ 45,000 $ 14,610 S (2,610) 30,000 $ 165,000 $ 45,000 $ 17,850 $ 102,150 30,000 $ 195,000 $ 45,000 $ 18,750 $ 131,250 35,000 $ 66,500 $ 45,000 $ 14,895 $ 6,605 35,000 $ 192,500 S 45,000 $ 18,675 $ 128,825 35,000 $ 227,500 $ 45,000 $ 19,725 $ 162,775 45,000 $ 85,500 $ 80,000 $ 15,465 S (9,965) 45,000 $ 247,500 80,000 $ 20,325 147,175 45,000 $ 292,500 $ 80,000 $ 21,675 $ 190,825 $ 5.5 Fair Good Poor $ 6.5 $ | | | 1.9 Fair 5.5 S $ Good S 6.5