a Below is a table containing monthly sales and sales staff

a)
Below is a table containing monthly sales and sales staff compensation, in dollars for the previous year. Use the high-low method to create an equation in the form Y = a+ bX to describe

the behavior of sales staff compensation.

Month	Comp	Sales
1	412,700	1,808,000
2	386,000	1,659,000
3	359,700	1,512,000
4	346,500	1,138,000
5	359,400	1,218,900
6	341,000	1,233,000
7	366,500	1,409,300
8	364,200	1,437,000
9	400,100	1,616,600
10	443,000	1,833,000
11	432,900	1,858,000
12	409,600	1,735,000

Other information:

Store rent expense is $70,000 / month

Utilites on average amount to 5% of sales staff compensation

Management staff, in aggregate, are paid $10,000 / month plus 2% of sales

Cost of goods sold is typically 58% of sales

Miscellaneous expenses are $1,000 / month

Given these data, determine the forecast net profit of the store at sales of $2,000,000 for the month

Identify at least two potential weaknesses in your profit forecast. (Limit 100 words)

Particulars

Amount

a) Sales

2000000

b) Cost of Goods Sold(a*58%)

1160000

c) Store Rent

70000

d) Utilities(a*5%

100000

e) Management Staff(10000+a*5%)

110000

f) Misc Expenses

1000

g) Profit Forecast(a-b-c-d-e-f)

559000

c) The two potential weakness areThe utilities and staff expense are calculated based on percentage of sales which may not be accurate

Particulars	Amount
a) Sales	2000000
b) Cost of Goods Sold(a*58%)	1160000
c) Store Rent	70000
d) Utilities(a*5%	100000
e) Management Staff(10000+a*5%)	110000
f) Misc Expenses	1000

g) Profit Forecast(a-b-c-d-e-f)	559000

a) Below is a table containing monthly sales and sales staff compensation, in dollars for the previous year. Use the high-low method to create an equation in th

a Below is a table containing monthly sales and sales staff

Solution

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