Instructions for registering and paying for the platform is available in Canvas as part of the syllabus. The instructions for this assignment are also be provided in the instructions worksheet within excel workbook.

The purpose of this project is to give you experience creating a multiproduct profitability analysis that can be used to determine the effects of changing business conditions on the client's financial position. Your goal will be to use Excel in such a way that any changes to the assumptions will correctly ripple through the entire profitability analysis. This means you will need to use formulas or cell references in all the required cells outside of the assumptions box. 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, Edgardo, an avid dog-lover, decided to start selling unique pet supplies at trade shows. He has two products:

Product 1: "Launch-it"- a tennis ball thrower that will sell for $12.

Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places his paw on the pedal. The treat dispenser will sell for $32.

Costs: Edgardo has hired an employee to work the trade show booths. The work contract is $1,200 per month plus a commission equal to 10% of revenue. Edgardo will also spend $525 per month on trade-show entry fees. Edgardo is purchasing the products from a supplier in Mexico. Launch-its cost $2.50 each; Treat-times cost $8 each. Shipping and handling on the Launch-its will cost $1.00 each; Shipping and handling on the Treat-times, which are heavier, will cost $5.00 each. The shipping and handling costs will be paid by Edgardo, not the customer. Assume Edgardo expects to sell 180 Launch-its and 90 Treat-times during his first month of operations (October). The sales mix 2" Launch-its" for every 1 "Treat-time" or a 2:1 ratio.

Edgardo's financial goal is to earn an operating income of $7,500 per month.

Directions -Part A

You have been hired by Edgardo to build a CVP model that will help him understand the impact of business conditions on his operating income. (See "Original Assumptions" worksheet.) In your model, all of the original assumptions will be listed in one area of the spreadsheet (blue box titled "Assumptions"). All other calculations in the model will reference the assumptions (blue box) such that if any assumption changes, the effect will ripple through the entire model. To accomplish this goal, you will use FORMULAs, rather than numbers, in every other cell in the worksheet. In other words, the only place you will type numbers is the blue assumptions box. The cells that must be completed in this assignment are outlined in red.

FORMATTING conventions to use throughout project:

- Round all UNITS to the nearest whole unit. Use the "decrease decimals" button on your tool bar rather than the Rounding function.

- Show all MONETARY amounts as dollars and cents. Round to the nearest cent. ($x.xx). Use the "decrease decimals" button rather than the rounding function.

- Show all percentages as %, not as decimals. (x%, not .xx)

- Right justify all cells (numbers should be to the right side of the cell, not in the middle or left)

1) Complete the assumptions (blue box) based on the data about Edgardo's business. Identify and list all variable costs separately and all fixed costs separately before finding the total unit cost for each type of cost.

2) Complete the Product Analysis (yellow boxes) assuming Edgardo only sells either Product #1 (Launch-its) OR Product #2 (Treat -times).

Check figures: B/E Product #1 = 236 units; B/E Product #2= 109 units

3) Complete the pro forma CM Income Statement for the month of October (green box). HINT: On product line income statements such as this, the fixed costs are only listed in the total column. Make sure you also show the totals for all other line items. Finally, calculate the overall CM % for the company.

Check figure: Operating income = $1011 CM % = 54%

4) Calculate the CM per composite unit (in orange box).

Check figure: CM per composite unit = $30.40

5) Use the CM per composite unit to calculate the TOTAL number of composite units needed to breakeven (TOTAL column in the lavender box). THEN, calculate the number of EACH type of product needed to breakeven. Finally, calculate the sales revenue associated with this volume for EACH product, and then add those to get the sales revenue at breakeven in total.

Check figures: B/E Product #1 = 113; B/E Product #2= 57

6) Use the CM per composite unit to calculate the total number of units needed to achieve Edgardo's target profit (TOTAL COMPOSITE UNIT column in the lavender 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 add those to get the sales revenue in total.

Check figures: B/E Product #1 =607; B/E Product #2= 303

7) Make sure you have cleaned up your worksheet using the formatting conventions list

Part B

Copy your original model "Original Assumptions "to a new spreadsheet and name that spreadsheet "What if Sales Mix". All the information from the "Original Assumptions" remains the same except for two changes:

(1) now the monthly sales volume is expected to be 186 "Launch-its" and 124 "Treat-times". So, the new sales mix is 3:2; and

(2) Edgardos purchasing price for Product #1 the Launch-its increases by 1.00. What is the new operating income? What is the new CM per composite Unit? Given this sales mix, how many units (in total) will Edgardo need to sell to earn his target profit?

ASSUMPTIONS Product #1 Launch-it Launch-it Unit CM $ Product #1: Sales price per unit Variable costs per unit: Jake's Pet Supplies Pro Forma Contribution Margin Income Statement For the month ending June 30 CM % Breakeven point: -in units Product #1 Product #2 Total -in sales revenue Contribution Margin Total variable cost per unit Sales Mix Monthly volume Target profit volume: -in units -in sales revenue Operating Income Treat-time CM % Product #2: Sales price per unit Variable costs per unit: Product #2 Treat-time Unit CM Calculation of Weighted average CM per unit Product #1 Product #2 Total CM % Breakeven point: -in units -in sales revenue Total variable cost per unit CM per unit X Sales Mix Monthly volume Sales Mix Fixed costs per month: Target profit volume: -in units CM per composite unit -in sales revenue Total fixed costs per month Product #1 Product #2 Composite Unit Multiproduct Breakeven point: -in units Target profit per month Sales revenue at breakeven Product #1 Product #2 Composite Unit Multiproduct Target profit point: -in units Sales revenue at target profit ASSUMPTIONS Product #1 Launch-it Launch-it Unit CM $ Product #1: Sales price per unit Variable costs per unit: Jake's Pet Supplies Pro Forma Contribution Margin Income Statement For the month ending June 30 CM % Breakeven point: -in units Product #1 Product #2 Total -in sales revenue Contribution Margin Total variable cost per unit Sales Mix Monthly volume Target profit volume: -in units -in sales revenue Operating Income Treat-time CM % Product #2: Sales price per unit Variable costs per unit: Product #2 Treat-time Unit CM Calculation of Weighted average CM per unit Product #1 Product #2 Total CM % Breakeven point: -in units -in sales revenue Total variable cost per unit CM per unit X Sales Mix Monthly volume Sales Mix Fixed costs per month: Target profit volume: -in units CM per composite unit -in sales revenue Total fixed costs per month Product #1 Product #2 Composite Unit Multiproduct Breakeven point: -in units Target profit per month Sales revenue at breakeven Product #1 Product #2 Composite Unit Multiproduct Target profit point: -in units Sales revenue at target profit