The Great Plains Cooperative Society (GPC) offers a wide range of gourmet foods (including organic foods) as well as an extensive selection of wine at its only store. To deal with rising costs and recent losses, as well as a major cash shortage, the cooperative store is planning to raise prices. The board has assembled the following data:
Gross sales ....... $4,345,800
Cost of goods sold .... 3,524,600
Store staff salaries ..... 235,320
Store rental & utilities .... 145,290
Other miscellaneous expenses . 97,000

Digging deeper, you find the following additional data:

Moreover, you find that $180,000 of the salaries are directly attributable to groceries and $230,000 to the wine department. The remainder is for persons common to both departments. The store manager informs you that it is not meaningful to separate out the area devoted for wine separately as the aisles and displays are intermingled.

Required:
Prepare a brief memo to the board as background materials for the meeting. Be sure to include an income statement and possible solutions to the loss and cashcrunch.

Transcribed Image Text:

Wine Grocenes Beginning invetry $284,600 S145,600 Ending inventory Purchases Sales 395,340 1,450,240 128,900 $2,080,000