Reference no: EM132763548

Question - 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 $50

Variable expenses per cooker $17

Fixed expenses per year:

Building rental $12400

Equipment depreciation $5900

Selling $18400

Administrative $16000

Required -

1. During the first year, the store sold only 3100 cookers. Using the table below, what is contribution approach income statement.

2. In relation to (a), Kowkeela's degree of operating leverage (in two decimal places) is?

3. 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?

4. Refer to the original data, the number of cookers to be sold each year to break even is?

5. Refer to the original data, Kowkeela has decided that she must earn at least $17600 the first year to justify her time and effort. The number of cookers to be sold to reach this target profit is?

6. Refer to the original data, Kowkeela now has two salespersons working in the store-one full time and one part time. It will cost her an additional $7800 per year to convert the part-time position to a full-time position. Kowkeela believes that the change would bring in an additional 689 unit sales each year. If this change is made, the new net income will be $?