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Use an excel FORMULA (referencing cells in exhibit A) to find the indifference point between 2 plans (the # of units sold where the company's
Use an excel FORMULA (referencing cells in exhibit A) to find the indifference point between 2 plans (the # of units sold where the company's net income is the same under both plans).
Plan 1 is whats in the table below. Plan 2 is the exact same except with 8.00 of sales commissions eliminated, and an additional 80,000 of fixed costs.
I know what the answer is, its 10000 units. Found by just doing 160x-128x-320000=160x-120x-400000. Solve for x. The problem is that I can't figure out how to have excel calculate this
EXHIBIT A | |||||||
Unit data (per suit) | Annual Fixed Costs | ||||||
Selling price per unit | $160.00 | Rent | $45,000 | ||||
Variable cost per unit | Salaries | $200,000 | |||||
Cost of suits | $120.00 | Advertising | $50,000 | ||||
Sales commission | $8.00 | Other fixed costs | $25,000 | ||||
Variable cost per unit | $128.00 | $320,000 | |||||
Tax rate | 40% | Plan 2 increase Fixed cost by: | $80,000 |
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