Case Problem: Optimal.xlsx
- 1. Buy here: http://homeworknumber.one/products.php?product=Cas e-Problem%3A-Optimal.xlsx Data File needed for Onto Case Problem: OptImal.xlsx CyberBugs Kerstin Nilsson Is the business manager at CyberBugs, a toy company in Columbia, Missouri, that sells small robotic toys that mimic the appearance and actions of insects. Ketstin wants to create an income statement for the Basic CyberBugs kit She wants to find the optimal price for selling the kit From her market research, Kerstin projects that the company can sell 12,000 16..521 per kit. Kerstin wants to know if the company's profits would increase if the sales price increased. Obviously, the higher the sales price, the higher the profit per kit; but the company Might also sell fewer kits at the higher price, resulting in an overall loss of profit. The optimal price point occurs when the company can sell the most units possible at the highest price without hurting sales. To calculate the optimal price point, you need M take into account the price elasticity of demand, which measures the response of sales volume to changes in price. From her research, Kerstin has determined a price elasticity value of 1.6 for CyberBugs products, which basically means that a 10 percent increase in prices will cause a 16 percent decline in sales. Taking this information into account, Ketstin asks you to determine the price that results in the highest net income. Complete the following, 1. Open the Optimal workbook located in the Excel10?Case3 folder included with your Data Ales, and then save the workbook as Optimal Price Point in the location specified by your instructor. 2. In the Documentation worksheet enter your name and the current date.
- 2. 3. In the Income Statement worksheet, in cell C10, enter 21 as the price per CyberBug Kerstin has already inserted the basic information about the Price Elasticity of Demand. Based on her calculations in cell C11, the company can sell 12,000 kits if the price per kit is $21. 4. In cell C12, calculate the projected revenue by multiplying the price per kit by the number of kits produced. 5. The company plans to manufacture about 3 percent more kits than it sells. In cell C15, calculate the kits produced by multiplying the value in C11 by 1.3. 6. In cell C16, enter a material cost per kit of $7.20, and in cell C17, calculate the total material coast by multiplying the material per kit by the number of kits produced.