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...

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 based on the information he collected. Tse's budget follows:

Sales Revenue                  $244,000

Cost of Goods Sold              177,000

Gross Profit                          $ 67,000

Selling and Admin Expenses:

    Salaries and Commissions Expense  $46,000

    Rent Expense                                         8,000

    Depreciation Expense                             2,000

    Insurance Expense                                     800

    Miscellaneous Expense                         12,000

Total Expenses                                          $68,800

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. Assume the role of Donna Tse. Write a memo to Towry outlining your suggestions.