Question

I always rate! Show Excel work, please

You have been asked to perform scenario analysis, sensitivity analysis, and break even analysis for producing a new golf ball. These new golf balls will sell from $2 a piece. In the best case scenario you think you will sell 750,000 balls, in the most likely case you will sell 500,000 balls and in the worst case you will sell 300,00 balls. Your variable cost is 35% and you have $300,000 in fixed costs. Your depreciation will be $100,000 and you have a 25% tax rate.

1. How sensitive are you to your variable cost? Create a data table ranging from 30% to 45% variable cost rate for the most likely case to show how changes in variable costs effect your net income.

Answer 1