essay
The Serious Reader Company
| Column1 | A | B | C | D | E | Column1 | Column2 | Column3 |
| Unit Sold | 4000 | 1000 | 500 | 400 | 400 | The Serious Reader Company | ||
| Income Statement | ||||||||
| Units Purchased | 6000 | 1,200 | 1000 | 1000 | 1000 | Total | ||
| Revenue | $80,000.00 | |||||||
| Resale Price | $4.00 | $12.00 | $20.00 | $45.00 | $60.00 | Variable Costs | ||
| Variable Cost | Cost | $27,000.00 | ||||||
| Cost | $0.50 | $4.00 | $10.00 | $20.00 | $20.00 | Shipping Cost | $9,450.00 | |
| Shipping Cost | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | Total Variable Costs | $36,450.00 | |
| Total Variable Costs | $2.00 | $5.50 | $11.50 | $21.50 | $21.50 | |||
| Contribution Margin | $43,550.00 | |||||||
| Fixed Expenses | Fixed Costs | |||||||
| Internet-related costs | $10,000.00 | Internet-related costs | $10,000.00 | |||||
| Travel, etc. | $4,000.00 | Travel, etc. | $4,000.00 | |||||
| Advertising | $1,000.00 | Advertising | $1,000.00 | |||||
| Other overhead | $5,000.00 | Other overhead | $5,000.00 | |||||
| Total Fixed Costs | $20,000.00 | Total Fixed Costs | $20,000.00 | |||||
| Net income | $23,550.00 | |||||||
| The Serious Reader Company | ||||||||
| Income Statement | ||||||||
| A | B | C | D | E | Total | |||
| Revenue | $16,000 | $12,000 | $10,000 | $18,000 | $24,000 | $80,000 | ||
| Variable costs | ||||||||
| Costs | $2,000 | $4,000 | $5,000 | $8,000 | $8,000 | $27,000 | ||
| Shipping costs | $6,000 | $1,500 | $750 | $600 | $600 | $9,450 | ||
| Total Variable Costs | $8,000 | $5,500 | $5,750 | $8,600 | $8,600 | $36,450 | ||
| Contribution Margin | $8,000 | $6,500 | $4,250 | $9,400 | $15,400 | $43,550 | ||
| Fixed costs | ||||||||
| Internet-related costs | $10,000 | |||||||
| Travel, etc. | $4,000 | |||||||
| Advertising | $1,000 | |||||||
| Other overhead | $5,000 | |||||||
| Total Fixed Costs | $20,000 | |||||||
| Net income | $23,550 | |||||||
| The Serious Reader Company | ||||||||
| Income Statement | ||||||||
| A | B | C | D | E | Total | |||
| Revenue | $21,600 | $12,960 | $18,000 | $40,500 | $54,000 | $147,060 | ||
| Variable costs | ||||||||
| Costs | $2,700 | $4,320 | $9,000 | $18,000 | $18,000 | $52,020 | ||
| Shipping costs | $8,100 | $1,620 | $1,350 | $1,350 | $1,350 | $13,770 | ||
| Total Variable Costs | $10,800 | $5,940 | $10,350 | $19,350 | $19,350 | $65,790 | ||
| Contribution Margin | $10,800 | $7,020 | $7,650 | $21,150 | $34,650 | $81,270 | ||
| Fixed Costs | ||||||||
| Internet-related costs | $10,000 | |||||||
| Travel, etc. | $4,000 | |||||||
| Advertising | $1,000 | |||||||
| Other overhead | $5,000 | |||||||
| Total Fixed Costs | $20,000 | |||||||
| Net income | $61,270 | |||||||
| The Serious Reader Company | ||||||||
| Income Statement | ||||||||
| A | B | C | D | E | Total | |||
| Revenue | $24,000 | $18,000 | $15,000 | $27,000 | $36,000 | $120,000 | ||
| Variable costs | ||||||||
| Costs | $2,000 | $4,000 | $5,000 | $8,000 | $8,000 | $27,000 | ||
| Shipping costs | $6,000 | $1,500 | $750 | $600 | $600 | $9,450 | ||
| Total Variable Costs | $8,000 | $5,500 | $5,750 | $8,600 | $8,600 | $36,450 | ||
| Contribution Margin | $16,000 | $12,500 | $9,250 | $18,400 | $27,400 | $83,550 | ||
| Fixed Costs | ||||||||
| Internet-related costs | $10,000 | |||||||
| Travel, etc. | $4,000 | |||||||
| Advertising | $1,000 | |||||||
| Other overhead | $5,000 | |||||||
| Total Fixed Costs | $20,000 | |||||||
| Net Income | $63,550 | |||||||
| The Serious Reader Company | ||||||||
| Income Statement | ||||||||
| A | B | C | D | E | Total | |||
| Revenue | $40,000 | $15,000 | $10,000 | $18,000 | $24,000 | $107,000 | ||
| Variable costs | ||||||||
| Costs | $2,000 | $4,000 | $5,000 | $8,000 | $8,000 | $27,000 | ||
| Shipping costs | $6,000 | $1,500 | $750 | $600 | $600 | $9,450 | ||
| Total Variable Costs | $8,000 | $5,500 | $5,750 | $8,600 | $8,600 | $36,450 | ||
| Contribution Margin | $32,000 | $9,500 | $4,250 | $9,400 | $15,400 | $70,550 | ||
| Fixed Costs | ||||||||
| Internet-related costs | $10,000 | |||||||
| Travel, etc. | $4,000 | |||||||
| Advertising | $1,000 | |||||||
| Other overhead | $5,000 | |||||||
| Total Fixed Costs | $20,000 | |||||||
| Net income | $50,550 | |||||||
| Unit Sold | 4000 | 1000 | 500 | 400 | 400 | |||
| Units Purchased | 6000 | 1,200 | 700 | 600 | 600 | |||
| Resale Price | $10.00 | $15.00 | $20.00 | $45.00 | $60.00 | |||
| Variable Cost | ||||||||
| Cost | $0.50 | $4.00 | $10.00 | $20.00 | $20.00 | |||
| Shipping Cost | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | |||
| Total Variable Costs | $2.00 | $5.50 | $11.50 | $21.50 | $21.50 |
<<< Segmented variable costing (behavioral) income statement for the company in good format
<<<< Assuming 90% of all the books in each category purchased were actually sold.
<<<< assuming that the price is increased by 50% for all five categories
<<<< To support my idea for the owner of this used-book business to quit their current job and go full time with this venture, I made a couple changes of what I would suggest first starting off with this business. Notice that categories C,D, & E the units sold were significantly low compared to the units purchased. That results in a loss and not making more than the expenses. I suggest buying less of those 3 categories of books and continuing to buy a high amount of A and B category since they sell the most. Later down the road you can raise the price of C,D, or E once the demand for those categories rises. Next thing I would suggest is increasing the price of categories A and B. Category A price change to $10, and B price change to $15.