You work for a chocolate company and have reason to suspect that a tariff may soon be imposed on one

of the ingredients you use to make your product. You want to develop a spreadsheet model that will
assess how the anticipated tariff may impact your bottom line and what strategies you might use to
mitigate that impact. Current and historical data related to manufacturing and sales is provided on the
‘Input’ worksheet.

Manufacturing Inputs
Raw Ingredient Costs: This table lists the current prices for your three main raw ingredients. It also lists
the anticipated tariff percent for one of your ingredients. Assume that if the tariff is imposed, it will
increase your cost to obtain that ingredient by the percent of the tariff.

Product Ingredient Percentages by Weight: This table indicates the percentage by weight of each raw
ingredient used to produce each type of candy bar.

Packaging Proportions: When filling the bag of assorted chocolate bars, you currently mix each type of
candy bar according to the proportions listed in this table.

Other Inputs: This table provides some additional information required for your analysis of production
costs. In addition to the cost of raw ingredients which you should be able to calculate from the
information above, all other manufacturing costs are summarized into a single figure provided on a per
ounce basis. The weight of chocolate in each bag and the current retail price are also provided.

Using this information, you should be able to calculate the profit contribution (revenue – production
cost) of each bag of assorted chocolate sold.

Historical Sales Data

Economic theory suggests that the quantity demanded of any good will decrease as price increases. Your
marketing department has tested several different retail price points over the past year and
extrapolated monthly unit sales (in thousands of units) at each price point.

Model Requirements
Produce a spreadsheet model that supports the following:

1. Calculate the cost of raw ingredients with and without an import tariff on any ingredient.
2. Compute the total cost to produce a single bag of assorted chocolates. This cost should include
the cost of raw materials and all ‘other production costs’.
3. Graph the historical sales data in a scatter plot and add a power curve trend line.
4. Based on the sales trend data, create a formula that estimates unit sales at any price point.
5. Construct a two-way data table to illustrate the combined effect on estimated net profit (unit
sales x unit price) of varying the tariff percent (from 0% to 20% in increments of 2%) and the
proportion of peanuts in the ‘Chocolate with Peanuts’ bar (from 15% to 45% in increments of
3%). Add conditional formatting to help visualize these results.
6. Construct a one-way data table to illustrate the effect of retail price (from $6.00 to $7.50 in
increments of $0.05) on estimated net profit.