Reference no: EM132754838

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

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

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

Problem 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?

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

Problem 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?

Problem 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 $?