Sanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens
Question:
Sanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and the economy in addition to new
competition. Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first step in planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise and experience, she develops the following:
Gross Margin per Customer Scenario(Price - Cost of Goods)Number of CustomersGood$5.838,000Fair4.828,000Poor1.923,000
Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possible scenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs
to be $33,000 plus $2 for every customer in excess of 28,000. The marketing and administrative costs are estimated to be $11,500 plus 3 percent of the gross margin.
Create an analysis of the possible operating income for Sanjana similar to that in Exhibit 13.15. What is the range of operating incomes?
Expert Answer:
Creating an analysis similar to Exhibit 1315 we can display the operating income for the nine possib... View the full answer
