In 2019, Jordie started a new business and hired his friend Kari. The business model is a
Question:
In 2019, Jordie started a new business and hired his friend Kari. The business model is a unique one, involving sales and installation of birdhouses. Kari builds birdhouses and sells them online (many customers chose to pick their purchases up at Kari's house rather than pay for shipping). Jordie focuses on installations. He visits customers' homes and helps them with choosing appropriate locations and installation.
Kari earns commission of $5 per birdhouse sold. Each birdhouse kit is purchased for $10, plus $5 shipping expense. Other monthly expenses are $300 for rent and utilities, and $200 for other materials such as painting supplies.
A birdhouse sells for $25 and installation is an additional $25. However, customers can purchase each product/service individually. If customers want a birdhouse shipped, a $10 shipping fee is added. On average, a shipment costs Jordie $7.50.
In 2019, 325 birdhouses were sold and installed. 480 birdhouses were sold individually (half of these were shipped to customers). Finally, there were 40 individual installations, where Jordie helped customers with birdhouses purchased elsewhere.
In 2020, Jordie expects individual sales of birdhouses to increase 20%, while the combined sales and individual installations will grow 10%. He plans to focus on online retail to continue this growth trend into the future. With advertising of $500 per month, Jordie believes that online sales can be boosted an additional 10% on 2020 projections.
Type out Jordie's 2019 Income Statement.
Also, analyze and comment on things Jordie has done well, things he could improve on, and things he should keep an eye on in 2020.
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta