Business Description After taking business classes, Jake, an avid dog-lover, decided to start selling unique pet supplies at trade shows. He has two products: Product 1: "Launch-it"- a tennis ball thrower that will sell for $10. Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places his paw on the pedal. The treat dispenser will sell for $30. Costs: Jake has hired an employee to work the trade show booths. The work contract is $1,000 per month plus a commission equal to 15% of revenue. Jake will also spend $500 per month on trade-show entry fees. Jake is purchasing the products from a supplier in Mexico. Launch-its cost $1 each; Treat-times cost $7 each. Shipping and handling on the Launch-its will cost $3 each; Shipping and handling on the Treat-times, which are heavier, will cost $11 each. The shipping and handling costs will be paid by Jake, not the customer. Assume Jake expects to sell 1,000 Launch-its and 750 Treat-times during his first month of operations (June). Jake's financial goal is to earn an operating income of $8,000 per month. He believes volume may grow at a rate of 5% a month. Directions You have been hired by Jake to build a CVP model that will help him understand the impact of business conditions on his operating income. In your model, all of the original assumptions will be hardcoded one area of the spreadsheet (blue box). All other calculations in the model will reference the assumptions (blue box) such that if any assumption changes, the effect will ripple through the entire model. To accomplish this goal, you will use FORMULAS, rather than numbers, in every other cell in the worksheet. In other words, the only place you will type numbers is the blue assumptions box. 1) Complete the assumptions (blue box) based on the data about Jake's business. Identify and list all variable costs separately and all fixed costs separately before finding the total for each type of cost. 2) Complete the Product Analysis (yellow boxes) assuming Jake ONLY sells either Product #1 (Launch-its) OR Product #2 (Treat-times). Check figures: B/E Product #1 = 333 units; B/E Product #2= 200 units 3) Complete the pro forma CM Income Statement for the month of June (green box). HINT: On product line income statements such as this, the fixed costs are only listed in the total column. Make sure you also show the totals for all other line items. Finally, calculate the overall WACM% for the company. Check figure: Operating income = $8,625 WACM% = 31% 4) Calculate the weighted average contribution margin (WACM) per unit (in orange box). Check figure: WACM/unit = $5.79 D G Launch ASSUMPTIONS Product: Sales ante per unit Minh Product Unit CM OM Toe Pet Supplies Proforma Contribution Margin rome Statement For the month ending one 10 Brenpoint in units intervenu Prod ve costs per COGS Shipping and Hindi Common Total variable content Total Tare volume in un les revenue Sales Varenie Contribution nepers [Noi Monthly volum Treat time WACM Product Se price per Product Unit CM CMN e point COGS Shindhandling Com Total vanwestern in case Canon or Wein Werni Post SMS Con Man Man volume Tarpont volume 5 WAZMA 20 Swart Entry Total fixed sperma Mund the 30 31 Expand change in Muitroduct Typrotet Pew Ivodu al
