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I need this worked out in Excel format Gourmet Go-To (GGT) distributes a high-end gourmet meals to its client's door for dinner parties, banquets and
I need this worked out in Excel format
Gourmet Go-To (GGT) distributes a high-end gourmet meals to its client's door for dinner parties, banquets and other events. Meals retail for $60 per each with a wide variety of meals available. Variable expenses are about $28.00 per meal (wages for delivery drivers $0.50, truck operating costs $0.25, kitchen operating costs $0.45, wages for kitchen staff $2.25, packaging $1.10, sales commissions $3.00, remainder for food costs), and fixed expenses (kitchen rental $100,000, depreciation on delivery trucks $40,000, kitchen equipment $5,000, base salaries for sales staff $15,000 each for 2 salespersons, remainder for officer and manager base salaries) total $400,000 per year. Its operating results for last year were as follows: Sales $ 1,620,000 Variable expenses 756,000 Contribution margin 864,000 Fixed expenses 400,000 Net operating income $ 464,000 Required: Answer each question in MS Excel, using clear labels and formulas independently based on the original data. If you do not know Excel well enough to do this, please let me know by Tuesday the week the case is due and I will either point you to a YouTube tutorial or two or record one for you. 1. Restate the operating results on a per unit basis for Sales, Variable expenses and Contribution Margin, also listing the ratios (percentages) for each. 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year's sales of meals increase by 12,000 meals. If fixed expenses increase by $400,000 (due to additional kitchen time and delivery trucks needed) by how much will operating income change? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Returning to the original contribution margin income statement (disregard #3), assume the president expects this year's unit sales to increase by 12%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realize this year? Check your work showing the contribution margin; you must show both pieces for full credit. 5. The sales manager is convinced that an 8% reduction in the selling price, combined with a $32,000 increase in advertising, would increase this year's number of meals sales by 20%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, she wants to add a small dessert to each meal, which would increase variable costs by $3.24 per meal. She thinks that this move, combined with some increase in advertising, would increase this year's number of meals sales by 15%. How much could the president increase this year's advertising expense and still earn the same $464,000 net operating income as last year? 7. Based on your knowledge of cost accounting and the cost structure that GGT has, list three strategies (in general, or specifically) that might help GGT cut costs (fixed or variable), increase sales, increase operating income and still deliver very high-quality gourmet mealsStep by Step Solution
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