Reference no: EM13756951

Case 1: Donna Tse has recently accepted the position of assistant manager at Cycle World, a bicycle store in St. Louis. She has just finished her accounting courses. Cycle World's manager and owner, Jeff Towry, ask Tse to prepare a budgeted income statement for 2011 based on the information he has collected. Tse's budget follows:

Cycle World

Budgeted Income Statement

For the year ending July 31, 2011  

Sales revenue		$244,000
Cost of goods sold		177,000
Gross profit		67,000
Operating expenses:
Salary and commission expense	$46,000
Rent expenses	8,000
Depreciation expense	2,000
Insurance expense	800
Miscellaneous expenses	12,000	68,800
Operating loss		(1,800)
Interest expense		(22.5)
Net loss		(2,025)

Requirement:

Tse does not want to give Towry this budget without making constructive suggestions for steps Towry Ccould take to improve expected performance. Write a memo to Towry outlining your suggestions.