Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cost-Volume-Profit Analysis Project The purpose of this project is to develop a CVP analysis that can be used to determine how changes in the business

image text in transcribed
image text in transcribed
image text in transcribed
Cost-Volume-Profit Analysis Project The purpose of this project is to develop a CVP analysis that can be used to determine how changes in the business plan and economic conditions will affect a client's financial situation. Your goal will be to use Excel in such a way that any changes to the assumptions will correctly flow through the entire profitability analysis. If executed properly, the client should be able to use this spreadsheet over and over, using different "what if" assumptions. Business Description After taking business classes, Jed, an avid poultry enthusiast, decided to start selling unique poultry supplies at trade shows. He has two produrs: Product 1: "Wash-it" - ag egg washer that will sell for $100. Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the bird pecks a target. The treat dispenser will sell for $50. Costs: Jed has hired an employee to work the trade show booths. The work contract is $1,000 per month plus a commission equal to 10% of revenue. Jake will also spend $400 per month on tradeshow entry fees. Jake is purchasing the products from a supplier in Mexico. Wash-its cost $50 each; Treat-times cost $22 each. Shipping and handling on the Wash-its will cost $5 each; Shipping and handling on the Treat-times, which are heavier, will cost $8 each. The shipping and handling costs will be paid by Jed, not the customer. Assume Jed expects to sell 200 Wash-its and 100 Treat-times during his first month of operations (June). Jed's financial goal is to earn an operating income of $10,000 per month. He believes volume may grow at a rate of 5% a month. 5) Use the WACM/unit to calculate the TOTAL number of units needed to breakeven (TOTAL col in in the first gray box). THEN, calculate the number CH type of product needed to breakeven. Finally, calculate the salts ievenue associated with this volume for EACH product, and then the sales revenue to breakeven in total. Check figures: B/E Product #1=33;B/E Product #2=16 6) Use the WACM/unit to calculate the total number of units needed to achieve Jake's target profit (TOTAL column in the second gray box). THEN, calculate the number of EACH type of product needed to achieve the target profit. Finally, calculate sales revenue associated with this volume for EACH product, and then the sales revenue in total. Check figures: T/P Product #1=268;T/P Product H2=134

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: John J. Wild, Ken W. Shaw

2010 Edition

9789813155497, 73379581, 9813155493, 978-0073379586

More Books

Students also viewed these Accounting questions

Question

LO 10-2 How do smell and taste function?

Answered: 1 week ago