Knope, Inc. is an online retailer that sells personalized Christmas wreaths, and they have had a successful first year. Karen, the owner, surpassed her initial sales goal of 200 units last year, selling 270. She anticipates a 10% increase this coming year and is able to sell each Christmas wreath for $28 with a cost to her of $11 per wreath. Karen is debating adding Halloween wreaths this year that would cost her $12.50 each and that she could sell for $33 per wreath. She anticipates the demand for these to be a bit lower and is aiming to sell 75 wreaths. Her selling, general, and administrative (SG&A) expenses will be $2,472, and she has an existing $2,000 loan with a 1% Annual Percentage Rate (APR). Knope, Inc. has a flat tax rate of 21%. Please answer the following questions:
a. If Knope, Inc. chooses to only continue selling Christmas wreaths, then what will their net income be for the upcoming year?
b. If Knope, Inc. decides to also sell the Halloween wreaths, then what will their net income be for the upcoming year?
c. What is the gross margin percentage for both a) and b), and what does this indicate about each choice for Karen and Knope, Inc.?

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The Answer of Knope, Inc. is an online retailer that sells personalized Christmas wreaths, and they have had a successful first year. Karen, the owner, surpassed her initial sales goal of 200 units last year, selling 270. She anticipates a 10% increase this coming year and is able to sell each Christmas wreath for $28 with a cost to her of $11 per wreath. Karen is debating adding Halloween wreaths this year that would cost her $12.50 each and that she could sell for $33 per wreath. She anticipates the demand for these to be a bit lower and is aiming to sell 75 wreaths. Her selling, general, and administrative (SG&A) expenses will be $2,472, and she has an existing $2,000 loan with a 1% Annual Percentage Rate (APR). Knope, Inc. has a flat tax rate of 21%. Please answer the following questions:
a. If Knope, Inc. chooses to only continue selling Christmas wreaths, then what will their net income be for the upcoming year?
b. If Knope, Inc. decides to also sell the Halloween wreaths, then what will their net income be for the upcoming year?
c. What is the gross margin percentage for both a) and b), and what does this indicate about each choice for Karen and Knope, Inc.?