I need help completing an excel project for my Managerial accounting classplease look at the attached file and workbook

spring_2019_cvp_excel_project.xlsx

340_p3.pdf

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CVP Modeling project

The aim 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. 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, Mike, 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 $10.

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 $30.

Costs: Mike has hired an employee to work the trade show booths. The work contract is

$1,000 per month plus a commission equal to 10% of revenue. Mike will also spend $500 per

month on trade-show entry fees. Mike is purchasing the products from a supplier in Mexico.

Launch-its cost $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 handling costs will be paid by Mike, not the customer.

Assume Mike expects to sell 200 Launch-its and 100 Treat-times during his first month of

operations (June).

Mike’s financial goal is to earn an operating income of $8,000 per month. He believes

volume may grow at a rate of 5% a month.

Directions

You have been hired by Mike to build a CVP model that will help him understand the impact of business condition

operating income. (See “Starting File” worksheet.) In your model, all of the original assumptions will be listed one

spreadsheet (blue box). All other calculations in the model will reference the assumptions (blue box) such that if a

assumption changes, the effect will ripple through the entire model. To accomplish this goal, you will use FORMU

than numbers, in every other cell in the worksheet. In other words, the only place you will type numbers is the b

assumptions box.

FIRST TASK: Rename your worksheet to your name: Name_CVP_Analysis (e.g., Smith_CVP_Analysis)

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

function.

– Show all MONETARY amounts as dollars and cents. Round to the nearest cent. ($x.xx). Use the “decrease decima

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 Mike’s business. Identify and list all variable cos

separately and all fixed costs separately before finding the total for each type of cost.

2) Complete the Product Analysis (yellow boxes) assuming Mike ONLY sells either Product #1 (Launch

(Treat -times).

Check figures: B/E Product #1 = 250 units; B/E Product #2= 125 units

3) Complete the pro forma CM Income Statement for the month of June (green box). HINT: On product line incom

statements such as this, the fixed costs are only listed in the total column. Make sure you also show the totals for

line items. Finally, calculate the overall WACM% for the company.

Check figure: Operating income = $900 WACM% = 48%

4) Calculate the weighted average contribution margin (WACM) per unit (in orange box).

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 gr

THEN, calculate the number of EACH type of product needed to breakeven. Finally, calculate the sales revenue

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 Mike’s target profit (TOTAL colum

second gray box). THEN, calculate the number of EACH type of product needed to achieve the target profit. Fina

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 Margin of Safety (MOS) using June sales as the expected sales (purple box). Calculate the MOS in t

sales revenue and as a percentage. Also calculate the current operating leverage factor (round to the nearest 2 d

places) and use it to determine the expected percentage change in operating income stemming from an expected

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.

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.

11) Check to make sure you have done everything on the grading rubric. Submit your file to Moodle by March 15,

pact of business conditions on his

mptions will be listed one area of the

ns (blue box) such that if any

goal, you will use FORMULAs, rather

will type numbers is the blue

_CVP_Analysis)

r tool bar rather than the Rounding

Use the “decrease decimals” button

or left)

ify and list all variable costs

t #1 (Launch-its) OR Product #2

On product line income

u also show the totals for all other

OTAL column in the first gray box).

culate the sales revenue associated

target profit (TOTAL column in the

eve the target profit. Finally,

s revenue in total.

x). Calculate the MOS in terms of

(round to the nearest 2 decimal

emming from an expected change in

d above.

d above.

e to Moodle by March 15, 11:59 pm.

CVP Model

ASSUMPTIONS

Product #1:

Sales price per unit

Variable costs per unit:

comission

product cost

shipping

Total variable cost per unit

Launch-it

$

10.00

1

1

2

4

Monthly volume

Product #2:

Sales price per unit

Variable costs per unit:

Total variable cost per unit

Monthly volume

Fixed costs per month:

Total fixed costs per month

Target profit per month

Expected change in volume (%)

Product #1

Unit CM

CM %

Breakeven point:

-in units

-in sales revenue

Launch-it

Target profit volume:

-in units

-in sales revenue

Treat-time

Product #2

Unit CM

CM %

Breakeven point:

-in units

-in sales revenue

Target profit volume:

-in units

-in sales revenue

Treat-time

CVP Model

Mike’s Pet Supplies

Pro Forma Contribution Margin Income Statement

For the month ending June 30

Product #1

Product #2

Total

Calculation of Weighted average CM per unit

Product #1

Product #2

Total

WACM %

WACM/unit

Multiproduct Breakeven point:

-in units

Sales revenue at breakeven

Product #1

Product #2

Total

Multiproduct Target profit point:

-in units

Sales revenue at target profit

Product #1

Product #2

Total

Margin of Safety (in $)

Margin of Safety %

Operating Leverage Factor

Expected % change in operating income (%)

EXCEL HINT: To copy an entire

bottom of the screen and choos

Once you have the copy, choos

Once you have built the model, use it to answer Jake’s questions about his business. Treat

each situation as a separate scenario. All comparisons should be made to the original

assumptions.

1. Save a copy of your original model to a new spreadsheet called “supplier cost increase”.

Say the supplier is expected to increase the cost of the products by 30%. What is the new

operating income? What is the new WACM%? What is the new MOS%? Briefly explain

your findings to the client.

Operating income

WACM percentage

MOS%

2. Save a copy of your original model to a new spreadsheet called “new sales mix”. Say

the monthly sales volume is now expected to be 175 “Treat-times” and 125

“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

Mike need to sell to earn his target profit? Briefly explain your findings to the client.

Operating income

3. Save a copy of your original model to a new spreadsheet called “alternative contract”.

Say Mike’s employee wanted to negotiate a different work contract: $1,550 per month

plus 5% of revenue. Given his original sales volume and mix, how would this contract have

changed Mike’s operating income? What is the new operating leverage factor? What is the

new expected percentage change in operating income if volume increases as expected in

the future? Briefly explain your findings to the client.

Operating income

WACM/unit

Units to earn target profi

Operating leverage facto

Expected % change in op

EXCEL HINT: To copy an entire worksheet, right click on the worksheet tab at the

bottom of the screen and choose “Move or Copy”. Then check the “create a copy” box.

Once you have the copy, choose “rename”.

EXCEL HINT: To copy a cell from a different worksheet, put a

want the number to go, and then go back to the original work

the cell, and then press enter.

NEW

Operating income

ORIGINAL

Change

Brief explanation:

WACM percentage

MOS%

Operating income

Brief explanation:

WACM/unit

Units to earn target profit

Operating income

Operating leverage factor

Expected % change in op inc

Brief explanation:

m a different worksheet, put a + in the cell where you

n go back to the original worksheet, put your cursor on

lanation:

lanation:

lanation:

Grading Rubric

Points possible

Points lost

File specifies your name

5

Original Assumption worksheet

Formatting conventions followed:

units

monetary amounts

percentages

right justified

5

5

5

5

ALL figures used formulas and cell

references except in blue box

15

All figures are correct (check figures

given in directions)

20

Advising Client worksheet

Supplier cost increase (green boxes)

Correct comparison figures

Explanation

5

5

New Sales mix (yellow boxes)

Correct comparison figures

Explanation

5

5

Alternative contract (purple boxes)

Correct comparison figures

Explanation

5

5

Data on worksheet follows

formatting conventions

5

Other 3 Worksheets

Other 3 worksheets properly labeled

5

Total

100

0

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