Dicision Case
Donna Tse has recently accepted the position of assistant manager at Cycle World, a bicycle store in St. Louis. She has just finished her accounting courses. Cycle World's manager and owner, Jeff Towry, asks Tse to prepare a budgeted income statement for 2011 based on the information he has collected. Tse's budget follows:
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CYCLE WORLD
Budgeted Income Statement
For the Year Ending July 31, 2011
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Sales revenue
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324,1,000
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Cint d goods sold
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Cross profit
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67,000
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Operati ng ex penscs:
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Salary and commission expense
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5,16.000
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Rem expense
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8,000
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Depredation expense
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2,000
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Insurance expense
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800
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Miscellaneous expenses
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12.000
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68,800
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Operating loss
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(1,800)
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Interest expense
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1225)
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Net loth
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$ (2,0251
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Requirement
1. Tse does not want to give Towry this budget without making constructive suggestions for steps Towry could take to improve expected performance. Write a memo to Towry outlining your suggestions.