Determine the assumption value to change

Assignment Help Operation Management

Reference no: EM132187296

Question: Using the attached Microsoft Excel worksheet, conduct a what-if analysis to make financial projections. Based on the formulas indicated below for determining the Total Operating Income (H16), show the financial projections for the six-month period, from January to June. H16 should be $87,733.

Determine the assumption value to change in the Assumptions table for H16 to reach the goal of $95,000.To do so, use goal seekingto assess andreport each assumption value (Margin %, Bonus, Commission, Newsstand Rental, Advertising, and Equipment Maintenance) to reach $95,000 in H16 and then recommend which assumptionvalue(one and only one) to reach this goal.

In your analysis write-up, indicate the value for eachassumptionvalue after conducting a goal seeking. Explainyour decision in selecting your chosen assumption value to cause the six-month operating income in cell H16 to increase from $87,733 to $95,000.

Note you will have to do the goal seeking six timesto determine the assumption values and so make sure not to save the changes (do not click "OK" for Goal Seek Status) so your Total Operating Income is reset to $87,733 each time.

• Cost of Good Sold = Revenue * (1 - Margin %)

• Gross Margin = Revenue - Costof Goods Sold

• Bonus = IF Revenue is greater than the Sales for Revenue for Bonus then give the Bonus Amount otherwise give 0 --> must use a IF() function

• Commission= Revenue * Commission %

• Newsstand Rental = Revenue * Booth Rental %

• Advertising= Revenue * Advertising %

• Equipment Maintenance = Revenue * Equipment Maintenance %

• Total Expenses = Sum of all Expenses for a specific month

• Operating Income = Gross Margin - Total Expenses

Make sure to calculate the total for each line item. You should notbe using any numbers in your formulas; only cell references should used except for the IF() function used for the Bonus as the false statement value is 0.

The formulas above are for the month of January. One you have entered the formulas for the first month, use the "fill handle" across the rest of the months. Note that the formulas do not indicate when to use relative, absolute and mixed cell references. You should know when to do so.

Your submission

• Microsoft Excel document with your analysis write-up in the comments section.

Reference no: EM132187296

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