Using an Excel spreadsheet, calculate the bottom line improvement using the base line below under these scenarios:
- Increase sales by 50%
- Reduce finance costs by 50%, keeping sales at $100,000
- Reduce production costs by 20% (cost of goods sold), keeping sales and finance costs at the initial levels
What option offers the best overall result?
Upload the Excel file with your calculations.
Communicate with your instructor if you have difficulties.
Item |
Base Line |
Sales |
$100,000 |
Cost of goods sold |
$80,000 |
Gross margin |
$20,000 |
Finance costs |
$6,000 |
Subtotal |
$14,000 |
Taxes at 25% |
$3,500 |
Contribution |
$ 10,500 |