Question: Gaming Solutions is a small company that assembles PCs to gamer customer specification. The company buys all of its component parts from Northern Oregon Computer
Gaming Solutions is a small company that assembles PCs to gamer customer specification. The company buys all of its component parts from Northern Oregon Computer Warehouse. In the past year, the company had the following before-tax profit:
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The company, owned by Steven Rich, has seven full-time employees. These employees are each paid a base salary of $38,000 per year. In addition, they receive a bonus equal to 30 percent of operating profits before bonuses. Owner "draw" is the amount Steven pays himself out of company profits.
The company is in the process of planning profit for the coming year. Northern Oregon Computer Warehouse has agreed that their prices to Gaming Solutions will be reduced by 20 percent on all purchases over $1,000,000.
Required
Estimate profit before taxes and owner "draw" for five levels of sales: $1,600,000; $1,700,000; $1,800,000; $1,900,000; $2,000,000. (Round all calculations to the nearest dollar.)
Sales Less $1,800,000 Cost of components Staff salaries Rent Utilities Advertising $1,170,000 266,000 40,000 8,000 7,000 1491,000 309,000 Operating profit before bonuses Less: Staff bonuses Profit before taxes and owner"draw" 92,700
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Sales 1600000 1700000 1800000 1900000 2000000 Less cost of components 1032000 1084000 1... View full answer
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