Study Appendix 7. A Speedy-Mart Store in Northcenter Mall has the following budgeted sales, which are uniform throughout the month:

May …….. $450,000

June ……… 375,000

July ……… 330,000

August …… 420,000

Cost of goods sold averages 70% of sales, and merchandise is purchased and paid for essentially as needed. Employees earn fixed salaries of $22,000 monthly and commissions of 10% of the current month’s sales, paid as earned. Other expenses are rent, $6,000, paid on the first of each month for that month’s occupancy; miscellaneous expenses, 6% of sales, paid as incurred; insurance, $450 per month, from a 1-year policy that was paid for on January 2; and depreciation, $2,850 per month.

1. Using spreadsheet software, prepare a table of budget data for the Speedy-Mart Store.

2. Continue the spreadsheet in number 1 to prepare budget schedules for (a) disbursements for operating expenses and (b) operating income for June, July, and August.

3. Adjust the budget data appropriately for each of the following scenarios independently and re-compute operating income using the spreadsheet:

a. A sales promotion that will cost $30,000 in May could increase sales in each of the following 3 months by 5%.

b. Eliminating the sales commissions and increasing employees’ salaries to $52,500 per month could decrease sales thereafter by a net of 2%.