Question

CS&E 1111                                      PRELab 7: spreadsheet design

Purpose:

The purpose of this lab is to expand your problem solving and spreadsheet design skills by performing a task that requires solving a complex problem. As part of this lab, you will be asked to design your own workbook solution. There is no one right way to do this; however some ways make it easier than others to update information and create multiple cases. Correct spreadsheet design will facilitate this type of common business analysis. Frequently, information will change or you will need to explore several possible scenarios.

Go to Carmen click on Modules then click on McGraw –Hill campus then click on McGraw-Hill new window then click on Simnet Grader. Starting files have green headers.

Select Prelab Prelab 7 Columbus Air as a Download resource. Be sure to Save and Enable Editing. It will be a blank workbook but you must download the the blank workbook in order to modify and upload it to Simnet. When you have completed the Columbus Air file you will Upload and Save it then you will Submit-all using Simnet. You must use the Download resource file and not another version to complete the Lab.

There is no SIMnet SIMpath assignment this week just the Resources Columbus Air portion.

Lab 7: Pre-Lab Assignment –complete before coming to lab:

spreadsheet design – columbus air problem

You are the owner of a small airline company called Columbus Air, which operates three airplanes on three different routes (Cancun, Los Angeles, and New York). As the owner, you are preparing a profit analysis for your company. Use the information that follows to setup the Columbus Air workbook solution for calculating profit. Be sure to read the entire data and calculation sections PRIOR to attempting this problem Remember that an extra 10 minutes spent planning your design could save you hours in execution and what-if analyses later!

Data Section

Information has been gathered from the previous year about your expenses and your revenues. ( Hint: think about cell references) These values are as follows:

• Employee wages
  • You have 3 pilots, who are each paid wages of $90,000 a year. There is 1 pilot per route.
  • You have 15 union employees, who are paid wages of $45,000 a year. There are 6 employees each assigned to the Los Angeles and Cancun routes, and 3 assigned to the New York route.
• Operating Costs
  • Maintenance expenses: Each plane is required to have one major maintenance session a year which costs $100,000 per plane.
  • Fuel costs: Last year you bought jet fuel at an average of $10 per gallon. Fuel consumption was prorated based on the miles per route and the number of trips made.
    • Total annual fuel consumption on the Cancun route was 700,000 gallons
    • Total annual fuel consumption on the Los Angeles route was 1,370,000 gallons
    • Total annual fuel consumption on the New York route was 40,000 gallons.
• Airfare revenues
  • A ticket to New York costs $300 roundtrip, and you sold 30,000 tickets last year.
  • A ticket to Los Angeles costs $820 rountrip, and you sold 17,500 tickets last year.
  • A ticket to Cancun costs $1,300 rountrip and you sold 7,500 tickets last year

Calculating previous year’s profit

Using the data given, calculate your annual profits for the past year for each route and your total overall profit. This will involve calculating total revenues, expenses, and taxes as outlined below. Such information will enable you, as the owner, to make informed decisions about your company. Make sure to design your workbook so that anyone using it can easily change numbers to perform What-if Analyses. Please explicitly list all inputs so they are easy to identify and update and use cell references whenever possible in your formulas. Failure to do so will result in loss of credit, even if the numeric values are correct.

• Use the data that you have been given to calculate your total revenues for each route.
• Calculate expenses by cost component (wages and operating costs) for each route. These may later individually vary, so be sure to list each separately.
• Calculate the net profit for each route. This is the amount of money the airline made, revenues less expenses.
• Calculate revenues, and expenses by category for all 3 routes combined. Then calculate the net profit for all 3 routes combined (Hint: Net profits before taxes are $ 10,755,000)
• Calculate taxes based on the net profit for all three routes. You do not need to calculate this value per route. Tax rates are determined based upon your net profit. The tax owed is calculated as the applicable tax rate times the net profit. Make a table on a new worksheet to contain the following tax rates:
  • If your company makes a net profit of less than $1,000,000 you are taxed at 15% ,
  • If your company makes a net profit of at least $1,000,000 but less than $5,000,000 you are taxed at 20%,
  • If your company makes a net profit of $5,000,000 or more you are taxed at 25%.
• After you make the new worksheet, use a lookup function to calculate the amount you have paid in taxes and your total profits after-taxes.
• Save and close the workbook. Then Upload and Save it to Simnet under Resources Prelab 7 Columbus Air and then Submit it. You will get 2 attempts to submit your file. Be sure to use only the file you downloaded from Simnet and made changes to, that you submit. You must submit your file to Simnet to get credit for Prelab. It is your responsibility to check that your file has been submitted.

Answer 1

	AMOUNT ($)
Particulars	New York Route	Los Angeles Route	Cancun Route
Revenue (No of Tickets Sold* Ticket Price)	90,00,000	1,43,50,000	97,50,000
Less Expense:
Fuel	-4,00,000	-1,37,00,000	-70,00,000
Wages of Pilot	-90,000	-90,000	-90,000
Union employee wages	-1,35,000	-2,70,000	-2,70,000
Maintenance cost	-1,00,000	-1,00,000	-1,00,000
Total expense	-7,25,000	-1,41,60,000	-74,60,000
Profit	82,75,000	1,90,000	22,90,000

The net profit for combined is 8275000+190000+290000 = 10755000

Total Profits	10755000
Tax @25%	2688750
After tax profits	8066250