The president feels very strongly that Mountain Sports should expand operations to a second location. She has even found a prime location in Canmore, Alberta, One of the great things about Canmore is its proximity to the mountains, and its only about 10 minutes away from this beautiful, vibrant and internationally known Banff tourist town. Research indicates that the Canmore market is well suited to both cross-country skis and bikes and that competition is fairly limited.

The investment in assets (cash, inventory, equipment) required for the new location is				$ 203 000
Minimum required return on investments				13%
Actual 2019 return on investment of the original location				21%
Management has provided the following income statement to the bank manager the expected net income in the next year.
	Static Budget Amount	%
Sales in Units	4 040
Sales	505 000	100%
Less: Variable Costs:
Cost of Goods Sold	221 000	44%
Sales Commissions	50 500	10%
Total Variable Costs	271 500	54%
Contribution Margin	233 500	46%
Less: Fixed Costs:
Advertising	22 000
Property Taxes	10 000
Rent	43 000
Salaries & Wages	111 000
Total Fixed Costs	186 000
Net Operating Income	47 500
Part A (Chapter 11): Calculate the following performance measurements for the proposed Canmore expansion (4 marks):
Margin	56%
Turnover
Return on Investment
Residual Income