Angie Hughes recently joined Cycle World, a bicycle store in St. Louis, as an assistant manager. She recently finished her accounting courses. Cycle World's manager and owner, Loretta Harland, asks Hughes to prepare a budgeted income statement for the upcoming year based on the information she has collected. Hughes' budget follows:

Requirement
Hughes does not want to give Harland this budget without making constructive suggestions for steps Harland could take to improve expected performance. Write a memo to Harland outlining your suggestions.

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CYCLE WORLD Budgeted Income Statement For the Year Ending July 31 Sales revenue Cost of goods sold. Gross profit Operating expenses: $244,000 177,000 S 67,000 Salary and commission expe Rent expense Depreciation expense Insurance expense Miscellaneous expenses $46,000 8,000 2,000 800 nse Operating loss Interest expense Net loss 12,000 68,800 $ (1,800) 225 (2,025)