Cabinet Accessory Company: Sales, Cost, and Gross Profit Analysis (Managerial Accounting)

Learning objectives

1. Find and correct errors in a data set (clean the data)
2. Add columns containing formulas to a data set
3. Create a pivot table in Excel
4. Create a pivot chart in Excel
5. Analyze sales data using a pivot table and a pivot chart
6. Create a calculated field in a pivot table
7. Sort a pivot table by stated criteria
8. Filter a pivot table
9. Interpret findings from a pivot table using segment margins and operating income

Data set background

This dataset represents sales and cost data for a fictitious company, Cabinet Accessory Company (CAC), covering the four-year period from 2014 to 2018. CAC sells cabinet hardware including knobs and pulls. In the project, the student is asked to calculate break even from the data. The project also focuses on the calculation of contribution margin from a set of sales data and how that sales and cost data can be viewed from the perspective of the region, product line, etc.

Data dictionary

• customer_number: Description
• region: There are eight regions: Central, East coast, Midwest, Northeast, Northwest, South, West, and International.
• date_of_sale: Description
• item: Description
• brand: Description
• collection: Description
• description: Description
• list_price: Description
• cost: Description
• quantity_sold: Description

Teaching notes

This project has students watch a tutorial on how to do specific things in Excel and then apply those skills to a larger data set. To get away from simply watching and mimicking, and get more into the critical thinking, add a writing requirement to this project. For each requirement, before watching the video, have students write down the type of information from the data dictionary that they will need to answer each of the questions in the requirements. Also, after creating each pivot table, have students write out the answers to the questions to give them practice interpreting what can be seen in the pivot table.

Requirements

1. Create three columns in the Data worksheet that calculate sales revenue, variable cost, and contribution margin for each sales record (each row.) Use the columns already named in the Data worksheet sales revenue, variable cost, and contribution margin, respectively. Format numbers in the three columns as Accounting with two decimal places.
2. Create a pivot table that shows sales revenue by region for each of the four years and quarters. Correct any errors in the original dataset in the worksheet that are revealed in this initial pivot table. Once you have corrected the errors in the original data set, refresh the pivot table to reflect the corrected data. Insert a pivot chart that shows the sales revenue trend by region over the four-year period. In the pivot chart, the x-axis should be years and the y-axis should be sales revenue. What trends do you see in the pivot table and pivot chart?
3. Create a pivot table that shows sales revenue, variable cost, and contribution margin for each year for each region.
4. Create a pivot table to answer the question What was the most profitable brand in each year, as measured by contribution margin?
5. Create a pivot table to answer the questions: Within each brand, what was the most profitable collection in 2018, as measured by the contribution margin ratio? The least most profitable collection for each brand? Use the field years to filter the data to include just the year of 2018. You will need to add a calculated field to the pivot table to calculate the contribution margin ratio. Within each brand, sort the collections by contribution margin ratio, from the largest to the smallest. Interpret your findings. Are any collections unprofitable? Which one(s)?
6. Complete the worksheet named segment margin. You will calculate each regions segment margin and operating income for 2018. (Hint: Link to the totals in the pivot table you created for Requirement 3.) You will get the fixed costs for calculating the segment margins from the fixed cost data worksheet. Do you think any regions should be dropped or otherwise restructured? Explain.