(Chapter 13)

Using the attached Microsoft Excel worksheet, conduct a what-if analysis to make financial projections. Based on the formulas indicated below for determining the Total Operating Income (H16), show the financial projections for the six-month period, from January to June. *H16 should be $87,733.*

Determine the assumption value to change in the Assumptions table for H16 to reach the goal of $95,000. To do so, use goal seeking to assess and report each assumption value (Margin %, Bonus, Commission, Newsstand Rental, Advertising, and Equipment Maintenance) to reach $95,000 in H16 and then recommend which assumption value(one and only one) to reach this goal.

In your analysis write-up, indicate the value for each assumption value after conducting a goal seeking. Explain your decision in selecting your chosen assumption value to cause the six-month operating income in cell H16 to increase from $87,733 to $95,000.

Note you will have to do the goal seeking six times to determine the assumption values and so make sure not to save the changes (do not click "OK" for Goal Seek Status) so your Total Operating Income is reset to $87,733 each time.

Cost of Good Sold = Revenue * (1 - Margin %)

Gross Margin = Revenue - Cost of Goods Sold

Bonus = IF Revenue is greater than the Sales for Revenue for Bonus then give the Bonus Amount otherwise give 0 --> must use a IF() function

Commission = Revenue * Commission %

Newsstand Rental = Revenue * Booth Rental %

Advertising = Revenue * Advertising %

Equipment Maintenance = Revenue * Equipment Maintenance %

Total Expenses = Sum of all Expenses for a specific month

Operating Income = Gross Margin - Total Expenses

Make sure to calculate the total for each line item. You should not be using any numbers in your formulas; only cell references should used except for the Bonus in the IF(logical_statement, true_value, false_value) formula the false_value is 0.

The formulas above are for the month of January. One you have entered the formulas for the first month, use the "fill handle" across the rest of the months. Make sure to indicate in each formula whether your cell reference is a relative (value varies from one month to another) or absolute (value does not change from one month to another --> use $). If you do not know you will have some mistakes in your calculation for the rest of the months.

Kioscaf
Six-Month Financial Projection
	January	February	March	April	May	June	Total
Revenue	$ 62,000	$ 58,750	$ 67,500	$ 68,200	$ 59,800	$ 60,100
Cost of Goods Sold
Gross Margin
Expenses
Bonus
Commission
Newsstand Rental
Advertising
Equipment Maintenance
Total Expenses
Operating Income							$ 87,733
What-If Assumptions
Margin	75.50%
Bonus	$ 4,000
Sales Revenue for Bonus	$ 60,500
Commission	28.00%
Newsstand Rental	11.00%
Advertising	6.00%
Equipment Maintenance	4.00%