SP

200

Fixed cost
Variable cost
Additional VC
Total VC
Selling price
Contribution towards fixed cost
Units sold
Sales
Variable Cost
Contribution towards fixed cost
Fixed cost
Operating Profit
Degree of Operating Leverage (Contribution/operating profit)

Option 1 Option 2 Option 3

2000
800
0
120
120
120
0
30
50
120
150
170
200
200
200
80
50
30
40
8000
8000
4800
6000
3200
2000
2000
800
1200
1200
2.666667 1.666667

8000
6800
1200
0
1200
1

Units sold
Sales
Variable Cost
Contribution towards fixed cost
Fixed cost
Operating Profit
Degree of Operating Leverage (Contribution/operating profit)

60
12000
7200
4800
2000
2800
1.714286

12000
9000
3000
800
2200
1.363636

12000
10200
1800
0
1800
1

Units sold
Sales
Variable Cost
Contribution towards fixed cost
Fixed cost
Operating Profit
Degree of Operating Leverage (Contribution/operating profit)

20
4000
2400
1600
2000
-400
-4

4000
3000
1000
800
200
5

4000
3400
600
0
600
1

Units sold
Sales
Less variable costs
Contribution margin
Less common fixed costs

Weighted average contribution margin

Smasher Basher
Dinker
Total
1000
2000
2000
5000
100000
120000
80000
300000
50000
48000
24000
122000
50000
72000
56000
178000
103000
Profit
75000

Microsoft Excel 14.0 Answer Report

Worksheet: [Emma Problem.xlsx]Sheet3
Report Created: 11/25/2014 11:26:38 AM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: GRG Nonlinear
Solution Time: 0.016 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001
Convergence 0.0001, Population Size 100, Random Seed 0, Derivatives Central
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegati
Objective Cell (Max)
Cell
Name
$E$14 Contribution/unit

Original Value
11450

Final Value
9417500

Variable Cells
Cell
Name
$C$16 Decision variables Nx100
$D$16 Decision variables Mx100

Original Value
50
60

Final Value
Integer
3000 Contin
95500 Contin

Constraints
Cell
Name
$E$18 Time
$C$16 Decision variables Nx100
$D$16 Decision variables Mx100

Cell Value
Formula
Status
200000 $E$18<=$G$18 Binding
3000 $C$16>=$C$19 Binding
95500 $D$16>=$D$19 Not Binding

ns are satisfied.

%, Assume NonNegative

Slack
0
0
92500

Microsoft Excel 14.0 Sensitivity Report

Worksheet: [Emma Problem.xlsx]Sheet3
Report Created: 11/25/2014 11:26:38 AM

Variable Cells
Cell
Name
$C$16 Decision variables Nx100
$D$16 Decision variables Mx100

Final
Reduced
Value Gradient
3000
-27.5
95500
0

Constraints
Cell
$E$18 Time

Name

Final Lagrange
Value Multiplier
200000
47.5

Nx100
Sales (units)
Sales (dollars)
Variable costs
Contribution margin
Fixed costs
Profit
Assembly time/pair
Pairs
Assembly time
Contribution/unit

Mx100

20000
80000
3000000 8800000
-700000 -1200000
2300000 7600000
-150000 -1500000
2150000 6100000
3
3000
9000
115

2
6000

15000
Objective
95 9417500

Decision variables

3000

95500

Time
Minimum units

3
3000

2
3000

200000

200000

Material A
Material B

Material C

Material D

2000

Material D

3000

$1.80 Sunk
$2.10 Incremental
$2.50 Sunk
$2.65 Irrelevant
$2.70 Incremental
$8.50 Sunk
$9.50 Irrelevant
$5.50 Opportunity
$33.00 Sunk
$45.00 Incremental
$7.00 Irrelevant
$33.00 Sunk
$45.00 Irrelevant
$7.00 Avoidable

Short term tactical decision making

Arjit (Manager)

Accountant
Hemant
$9,000.00

$10,500.00
$3,750.00
$4,050.00
$6,800.00
$4,400.00
$90,000.00

90000
$99,000.00

-21000

Long term strategic decision making

Yogesh (CEO)
$10,500.00

$4,050.00

$4,400.00
90000

$135,000.00

FC
VC/unit
SP/unit

2000
120
200

2 BEP

25

3 Units to be sold

40

4 Operating income
Units to be sold

1600
45

5 Current sales qty

Total revenue
Total FC
New VC
New total revenue
Total cost
New profit
No point in advertising

40
8000
2500
5280
8800
7780
1020

Old cost
Old profit

6 New SP
Qty
VP
Total cost
Total revenue
Profit
No point in reducing price.

175
50
115
7750
8750
1000

At 50 qty,
Total reven
Total cost
Profit

8 BEP
Sales
Margin of safety

25 units
40 units
15 units

9 Option 1
6800
Option 2
6800
Option 3
6800
All options give the same result.

5000
8000
3000

6800
1200

10000
8000
2000