Chapter 5: Applying Excel The Chapter 5 Form worksheet is to be used to create your own worksheet version of the Review Pr example in the text. Chapter 5: Applying Excel: Exercise (Part 2 of 2) 2. Change all of the numbers in the data area of your worksheet so that it looks like this: B C 1 Chapter 5: Applying Excel 2 Data 4 5 Unit sales Selling price per unit Variable expenses per unit Fixed expenses 40,000 units $ 70 per unit $ 35 per unit $ 700,000 6 7 If your formulas are correct, you should get the correct answers to the following questions, Wa What ie the branleven in dollar enlee? Required information If your formulas are correct, you should get the correct answers to the following questions. (a) What is the break-even in dollar sales? Brouk Bales in dollar $ 1,400,000 (b) What is the margin of safety percentage? Margin of safety porcentage 5,000 % (c) What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage 1.24 3. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20% Percentage increase in net operating income 871% 4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: B 1 Chapter 5: Applying Excel 2 3 4 48.000 units 5 Data Unit sales Selling price per unit Variable expenses per unit Fixed expenses 6 $ 70 per unit $ 35 per unit $ 700,000 7 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (loss) (b) By what percentage did the net operating income increase? Percentage increase in net operating income 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $18,000 and at that price, Thad estimates 400 units would be sold each year. The variable cost to produce and sell the cycles would be $12,600 per unit. The annual fixed cost would be $1,728.000. a. What is the break-even in unit sales? Margin of safety in dollars c. What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the Western Hombre would have to be reduced to $15,500 to compete effectively. In that event, Thad would also reduce fixed expenses to $1,435,000 by reducing advertising expenses, but he still hopes to sell 400 units per year. d. What would the net operating income be in this situation? (Negative amount should be indicated by a minus sign.) Net operating income loso) 5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $18,000 and at that price, Thad estimates 400 units would be sold each year. The variable cost to produce and sell the cycles would be $12,600 per unit. The annual fixed cost would be $1,728,000. a. What is the break-even in unit sales? Break-even in unit sales b. What is the margin of safety in dollars? Margin of safety in dollars el What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage 2 Drau dit View Insert Format Tools Data Window Help Chapter_5_Applying Excel_Student Form.xlsx Q- Search in Sheet Home Layout Tables Review Charts Alignment Formula Data Format Edit SmartArt Number General Font Cells Themes Arial 10 7 U B Paste Algin % Conditional Formatting Styles Actions Themes C9 fx A Chapter 5: Applying Excel B C D 5 Data Unit sales - Selling price per unit Variable expenses per unit Fixed expenses 40,000 units $70 per unit $35 per unit $700,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relationships 2 Compute the CM ratio and variable expense ratio 3 Selling price per unit 4 Variable expenses per unit 5 Contribution margin per unit $70 per unit 35 per unit $35 per unit 7 CM ratio B Variable expense ratio 50% 50% Compute the break-even 1 Break-even in unit sales 2 Break-even in dollar sales 20,000 units $1,400,000 3 $1,400,000 5000% 4 Compute the margin of safety 5 Margin of safety in dollars Margin of safety percentage 7 B Compute the degree of operating leverage 3 Sales Variable expenses 1 Contribution margin Chapter 5 Form Normal View Ready $ 2,800,000 1.400,000 1,400,000 + Home Review Font Themes 10 Paste Formatting Styles Thames Aa- D ile Edit View Insert Format Tools Data Window Help Chapter 5 Applying Excel Student Form.xlsx Q- Search in Sheet Layout Tablas Charts SmartArt Formulas Data All went Number Format 12) Arial General ES B 7 Conditional Align Actions C9 x fx A B C 12 Compute the CM ratio and variable expense ratio 13 Selling price per unit $70 per unit 14 Variable expenses per unit 35 per unit 15 Contribution margin per unit $35 per unit ap 16 17 CM ratio 50% 18 Variable expense ratio 50% 19 20 Compute the break-even 21 Break-even in unit sales 20,000 units 22 Break-even in dollar sales $1,400,000 23 24 Compute the margin of safety 25 Margin of safety in dollars $1,400,000 26 Margin of safety percentage 5000% 27 28 Compute the degree of operating leverage 29 Sales $ 2,800,000 30 Variable expenses 1,400,000 31 Contribution margin 1,400,000 32 Fixed expenses $270,000 33 Net operating income $ 1,130,000 34 35 Degree of operating leverage 1.24 36 37 38 39 40 41 42 Chapter 5 Form + Normal View Ready Grow HE