performance review and budgeting
Review Decision Case 1 (Donna Tse) located on page 1127in you textbook. Answer the case question in the Requirements section of the case. Your memo should be at least three paragraphs in length.
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:
Budgeted Income Statement
For the Year Ending July 31, 2011
Sales revenue $244,000
Cost of goods sold 177,000
Gross profit 67,000
Salary and commission expense $46,000
Rent expense 8,000
Depreciation expense 2,000
Insurance expense 800
Miscellaneous expense 12,000 68,000
Operating loss (1,800)
Interest expense (225)
Net loss $ (2,025)
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.
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