Current Expenses Average monthly sales over the last quarter was $20,000 Cost of goods sold is...

Current Expenses

Average monthly sales over the last quarter was $20,000
Cost of goods sold is $10,000
Promotional costs are $1000
“Other” fixed costs are $1000
Taxes are 30% of your operating profit
This leaves you with $5,600 a month, of which, you need $5000 to live on

Expansion Costs

You have found a commercial office and storage space for $1500 a month.
You estimate it would cost you about $1500 a month to hire someone to work 20 hours a week
You believe that by doubling your promotional expenses that you could increase your sales by about 50%. (Your COGS would proportionately go up as well.)

SHOW YOUR WORK AND EXPLAIN YOUR REASONING TO ANSWER THE FOLLOWING:

CAN YOU AFFORD TO EXPAND?

HOW MUCH MONEY WOULD YOU HAVE LEFT AFTER EXPENSES?

HOW MUCH MONEY, IF ANY, COULD YOU REINVEST IN THE BUSINESS?

WHAT IF your sales instead doubled if you spent $3000 a month in promotion and you increased payroll to $2,500 to help keep up.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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