You are a manager at RTZ Corp, a manufacturing company, and must meet with top business executives and owners at the beginning of 2020 to discuss projected 2020 profitability. You currently have actual 2019 results and will present two separate scenarios (below) that would enhance production and/or effect cost or sale price for 2020. You expect to be asked about the effects of these scenarios on company profit, break-even and margin of safety as well as be able to adjust those items for any changes discussed during the meeting.

Scenario #1: Lease new equipment to enhance production efficiency. This would require the use of higher quality materials but would decrease direct labor cost, allow the business to reduce the sale price and incur more sales.

Scenario #2: Change direct material vendor to produce higher quality product. Sale price could increase to reflect higher quality, overall sales would decrease but so would selling costs.

Required:Follow the below instructions to complete the cost-volume-profit analysis. This project must be completed using the Microsoft Excel file "RTZ CVP Analysis F20" provided to you in Canvas under "Assignments".

Instructions:

1. Download the "RTZ CVP Analysis F20" Excel file from Canvas and save it to your hard-drive or other device. This will be your working file that you will complete the project with and eventually submit back to Canvas as your completed assignment.
2. Complete the worksheet by replacing every "?" with a formulEvery cell marked with a "?" must be replaced with formulas only; no hard-keyed numbers are allowed in these cells! Make Excel do the calculations for you. If formulas are entered correctly, the calculations will update immediately if/when any changes are made to the scenarios above.
3. Step #1 Inputs: For each scenario, calculate the new sales and cost amounts based on the 2019 actual inputs and changes to those amounts based on the applicable scenario above.
4. Step #2 Income Projections: Complete the Contribution Margin Income Statement for 2019 and each scenario.
5. Step #3 CVP Analysis: Complete the CVP calculations for 2019 and each scenario.
6. Step #4 Recommendation: Using proper grammar and complete sentences, indicate which scenario you would recommend for 2020 with a detailed description as to why you prefer that scenario.
7. Once you have completed all the steps you then need to upload your final Excel file to Canvas for submission. For instructions on how to submit an assignment through Canvas go to https://community.canvaslms.com/docs/DOC-9539-421241972

Please Note:

• Here is a check figure that should be helpful:
• 2019 Operating Income = $2,120,000

Engines, Inc. Financial Projections - 2020 \"lo Change from 2019 Actual Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs Stag #2 Income Proiections: Sales revenue Less variable expenses: Direct labor 7 ? '7 Direct materials '7 ? '7 Variable overhead '7 ? '7 Variable selling & admin '2 ? '1' Total variable expenses 7 ? '7 Contribution margin '7 ? '7 Less xed mfg overhead '7 ? '7 Less xed selling & admin '3 ? 7 Operating income '3 ? '7 an QVP Analysis: Contribution margin per unit '? '? '? Contribution margin ratio '? ? ? Break-even sales in units '? ? '? Break-even sales in $$ '? ? ? M R mm n I n r i in Margin of safety in units '? ? '? Margin of safety in sales $$ '? ? '? # Units to achieve target prot of $2,500,000 NIA