Please help me!
Instructions:
(All information needed is contained within these slides.) If anything, I think I have the option to make an excel file as I want.)
13 MOS 15 16 2. Save a copy of your original model to a new spreadsheet called "new sales mix". Say the 18 monthly sales volume is now expected to be 175 "Treat-times" and 125 Operating income Brief explanation: 19 "Launch-its" (same total units, but a different sales mix). What is the new operating income? What is the new WACM/unit ? Given this sales mix, how many units (in total) will Jake need to WACM/unit 20 sell to earn his target profit? Briefly explain your findings to the client. 21 Units to earn target profit 22 23 24 25 26 3. Save a copy of your original model to a new spreadsheet called "alternative contract". Say 27 Jake's employee wanted to negotiate a different work contract: $1,500 per month plus 5% of Operating income Brief explanation: revenue. Given his original sales volume and mix, how would this contract have changed Jake's 28 operating income? What is the new operating leverage factor? What is the new expected 29 Operating leverage factor percentage change in operating income if volume increases as expected in the future? Briefly 30 explain your findings to the client. 31 Expected % change in op inc 32 33CVP Modeling project Directions The purpose of this project is to give you experience creating a multiproduct profitability analysis You have been hired by Jake to build a CVP model that will help him understand the impact of business conditions on his operating that can be used to determine the effects of changing business conditions on the client's financial Income. (See "Starting File" worksheet.) In your model, all of the original assumptions will be listed one area of the spreadsheet (blue position. Your goal will be to use Excel in such a way that any changes to the assumptions will box). All other calculations in the model will reference the assumptions (blue box) such that if any assumption changes, the effect correctly ripple through the entire profitability analysis. If executed properly, the client should be will ripple through the entire model. To accomplish this goal, you will use FORMULAs, rather than numbers, in every other cell in able to use this spreadsheet over and over, using different "what if" assumptions. the worksheet. In other words, the only place you will type numbers is the blue assumptions box. FORMATTING conventions to use throughout project: Business Description -Round all UNITS to the nearest whole unit. Use the "decrease decimals" button on your tool bar rather than the Rounding function. Show all MONETARY amounts as dollars and cents. Round to the nearest cent. ($x.xx). Use the "decrease decimals" button rather After taking business classes, Jake, an avid dog-lover, decided to start selling unique pet supplies at than the rounding function. trade shows. He has two products: 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) Product 1: "Launch-it"- a tennis ball thrower that will sell for $10. Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places 1) Complete the assumptions (blue box) based on the data about Jake's business. Identify and list all variable costs separately and all his paw on the pedal. The treat dispenser will sell for $30. fixed costs separately before finding the total for each type of cost. Costs: Jake has hired an employee to work the trade show booths. The work contract is $1,000 2) Complete the Product Analysis (yellow boxes) assuming Jake only sells either Product #1 (Launch-its) OR Product #2 (Treat -times). per month plus a commission equal to 10% of revenue. Jake will also spend $500 per month on trade-show entry fees. Jake is purchasing the products from a supplier in Mexico. Launch-its cost Check figures: B/E Product #1 = 250 units; B/E Product #2= 125 units $1 each; Treat-times cost $7 each. Shipping and handling on the Launch-its will cost $2 each; Shipping and handling on the Treat-times, which are heavier, will cost $8 each. The shipping and 3) Complete the pro forma CM Income Statement for the month of June (green box). HINT: On product line income statements such handling costs will be paid by Jake, not the customer. 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 WACM% for the company. Assume Jake expects to sell 200 Launch-its and 100 Treat-times during his first month of operations (June). Check figure: Operating income = $900 WACM% = 48% Jake's financial goal is to earn an operating income of $8,000 per month. He believes volume may 4) Calculate the weighted average contribution margin (WACM) per unit (in orange box). grow at a rate of 5% a month. Check figure: WACM/unit = $8.00 5) Use the WACM/unit to calculate the TOTAL number of units needed to breakeven (TOTAL column in the first gray 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 the sales revenue to breakeven in total. Check figures: B/E Product #1 = 125; B/E Product #2= 63 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: B/E Product #1 =792; B/E Product #2= 396 7) Calculate the MOS using June sales as the expected sales (purple box). Calculate the MOS in terms of sales revenue and as a percentage. Also calculate the current operating leverage factor (round to the nearest 2 decimal places) and use it to determine the expected percentage change in operating income stemming from an expected change in sales volume Check figures: MOS%= 38%; Operating leverage factor= 2.67 8) Change name of worksheet to "Original Assumptions" 9) Make sure you have cleaned up your worksheet using the formatting conventions listed above. 10) Go to the "Advising client" worksheet and follow the directions found there.Grading Rubric Points possible Points lost File name specifies Name 5 Original Assumption worksheet Formatting conventions followed: units monetary amounts percentages right justified ALL figures used formulas and cell 15 references except in blue box All figures are correct (check figures given 20 in directions) Advising Client worksheet Supplier cost increase (green boxes) Correct comparison figures Explanation New Sales mix (yellow boxes) Correct comparison figures Explanation Alternative contract (purple boxes) un un Correct comparison figures Explanation Data on worksheet follows formatting 5 conventions Other 3 Worksheets Other 3 worksheets properly labeled 5 Total 100 Total Score: 100A B C D E F G H K ASSUMPTIONS Product #1 Launch-it Jake's Pet Supplies w Product #1: Launch-it Unit CM Pro Forma Contribution Margin Income Statement Sales price per unit CM % For the month ending June 30 Variable costs per unit: Breakeven point: -in units Product #1 Product #2 ota -in sales revenue Total variable cost per unit Target profit volume: 10 -in units 11 Monthly volume -in sales revenue 12 13 Product #2: Treat-time WACM % 14 Sales price per unit Product #2 Treat-time 15 Variable costs per unit: Unit CM 16 CM Calculation of Weighted average CM per unit 17 Breakeven point: Product #1 Product #2 Total 18 -in units 19 Total variable cost per unit -in sales revenue 20 21 Monthly volume Target profit volume: 22 -in units WACM/unit 23 Fixed costs per month: -in sales revenue 24 25 26 Total fixed costs per month Multiproduct Breakeven point: Product #1 Product #2 Tota 27 -in units 28 Target profit per month Sales revenue at breakeven 29 30 Expected change in volume (%) Multiproduct Target profit point: Product #1 Product #2 Tota 31 -in units 32 Sales revenue at target profit 33 34 Margin of Safety (in $) 35 36 Margin of Safety % 37 38 Operating Leverage Factor 39 40 Expected % change in operating income (%) 41
