Scenario 2: Pete wants each product line in the mix to be profitable. Use a One Variable Data Table to determine thenumber of units for each product that should be produced (to the nearest thousand) to make each product line profitable.OperatingIncome (Loss)SCENARIO 2Product AProduct BProduct CUnits???Based on your calculations above, which scenario creates the highest overall Operating Income for the company? Hello Company makes three different products. Due to the constraints of their manufacturing equipment and warehouse facility, thecompany is only able to produce, store, and sell a total of 50,000 units each month. The production of Products A and B varies each month;however, Product C is a special order for one customer who purchases the same number of units every month. Pete Davila, the CEO, has|provided the following data from last month for each product.Income StatementProduct AProduct BProduct CМax Cарacity5,0008.00 $2.00 $Units43,00010.00 $3.00 $20,000 $2,00050,000Price per unitVariable expense per unit$$$50.0015.00 $20.00Total Fixed Costs40,000 $10,000Product Sales$430,000 $40,000 $100,000 $570,000(169,000)401,000(70,000)331,000Variable Costs(129,000)(10,000)30,000 $(30,000)70,000 $Contribution Margin$301,000 $Fixed Costs(20,000)281,000(40,000)(10,000)(10,000)60,000 $Operating income (loss)RequiredUsing the Data Table What-If Analysis tool in Excel, determine the Units and Operating Income (Loss) for each product basedon the following scenarios. (Hint: Don't forget that the warehouse can only hold up to 50,000 units.)Scenario 1: Pete wants to find the mix of units that will result in the highest overall Operating Income, perform this analysisusing a two-variable data table. Product A can vary between 40,000 units and a maximum of 45,000 units.Product B can vary between 3,000 units and a maximum of 8,000 units. Both Products A and B are manufactured in1,000-unit increments. The production level of Product C is the same each month at 2,000 units.SCENARIO 1Product AProduct BProduct COperatingIncome (Loss)331,00043,00043,000Units43,000 $5,000 $2,000 $50,000 $43,000%24

Particulars Product A Product B Product C Selling Price Per Unit 10 8 50 Less: Variable Cost -3…

Hello Company makes three different products. Due to the constraints of their manufacturing equipment and warehouse facility, the company is only able to produce, store, and sell a total of 50,000 units each month. The production of Products A and B varies each month; however, Product C is a special order for one customer who purchases the same number of units every month. Pete Davila, the CEO, has provided the following data from last month for each product. Income Statement Product A Product B Product C Max Capacity Units 43,000 10.00 $ 3.00 $ 20,000 $ 5,000 8.00 $ 2.00 $ 2,000 50,000 Price per unit Variable expense per unit Total Fixed Costs 50.00 $ 15.00 $ 10,000 20.00 $ 40,000 $ Product Sales $ 40,000 $ 100,000 $ (30,000) 70,000 $ (10,000) 60,000 $ 430,000 $ 570,000 Variable Costs (129,000) $ (10,000) 30,000 $ (40,000) (10,000) (169,000) 401,000 301,000 $ (20,000) 281,000 Contribution Margin Fixed Costs (70,000) 331,000 Operating income (loss) Required Using the Data Table What-If Analysis tool in Excel, determine the Units and Operating Income (Loss) for each product based on the following scenarios. (Hint: Don't forget that the warehouse can only hold up to 50,000 units.) Scenario 1: Pete wants to find the mix of units that will result in the highest overall Operating Income, perform this analysis using a two-variable data table. Product A can vary between 40,000 units and a maximum of 45,000 units. Product B can vary between 3,000 units and a maximum of 8,000 units. Both Products A and B are manufactured in 1,000-unit increments. The production level of Product C is the same each month at 2,000 units. SCENARIO 1 Product A Product B Product C Operating Income (Loss) 331,000 43,000 43,000 43,000 Units 43,000 $ 5,000 $ 2,000 $ 50,000 $ %24

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q