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Help! Need to show breakeven point!

Customer Question

Golden Star Winery Case Golden Star Winery produces midlevel wines consumed primarily in North America. Given below is the projected income statement for the company for 2011.

Projected Income Statement (2011)

Sales (100,000 cases at $7 per case)

$700,000

Cost of goods sold:

Materials

$180,000

Labor

$225,000

Fixed manufacturing expenses

$45,000

 

Administrative and selling expenses:

Delivery

$30,000

Commissions

$50,000

Advertising

$10,000

Travel

$5,000

Fixed administrative and selling expenses

$15,000

Total expenses

$560,000

Net income before taxes

$140,000

Create a report answering the following questions: • Complete the following table in a fully functional Microsoft Excel spreadsheet.

Price

Quantity

Total Revenue

Total Variable Cost

Total Fixed Cost

Total Cost

Profit

$8.00

65,000

 

 

 

 

 

$7.75

75,000

 

 

 

 

 

$7.50

80,000

 

 

 

 

 

$7.25

90,000

 

 

 

 

 

$7.00

100,000

 

 

 

 

 

$6.75

115,000

 

 

 

 

 

$6.50

120,000

 

 

 

 

 

PriceQuantityTotal RevenueTotal Variable CostTotal Fixed CostTotal CostProfit
$8.00 65,000 520,000 325,000 60,000 385,000 135,000
$7.75 75,000 581,250 375,000 60,000 435,000 146,000
$7.50 80,000 600,000 400,000 60,000 460,000 140,000
$7.25 90,000 652,500 450,000 60,000 510,000 142,500
$7.00 100,000 700,000 500,000 60,000 560,000 140,000
$6.75 115,000 776,250 575,000 60,000 635,000 141,250
$6.50 120,000 780,000 600,000 60,000 660,000 120,000

Using Excel, prepare a graph showing the breakeven point and any profit or loss at the current price of $7.

Explain to the Golden Star management the implications of this analysis. •

What is the elasticity coefficient for each price between $6.50 and $7.50? Is the demand elastic or inelastic at these points? How can this information be useful to management in its pricing and output decisions? • On the basis of your calculations and the information above, what recommendations would you make to Golden Star in terms of price and output levels?

 

I have missed my deadline, but got an extension until tomorrow- someone help!

Submitted: 7 years ago.
Category: Homework

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