Create your own original EXCEL file with price and cost data from the case, separately showing all variable cost items all fixed cost items, and the client’s current price per UNIT and number of UNITS sold. (10 points to fully meet requirements)

Required Multimedia: * How to create a Breakeven Analysis and a Target Contribution:

1. http://www.youtube.com/watch?v=Y22_AC6BN9Y

2. http://www.youtube.com/watch?v=TLOo2mY6FIw&feature=related

Required Readings:

* Capital budgeting:http://www.teachmefinance.com/capitalbudgeting.html

* Simon, Herman.  Confessions of the Pricing Man, Springer International Publishing, 2015. Chapter one.  ISBN:  978-3-319-20399-7 (e-reserves)

Assignment (8%):

In this assignment, you are to  answer all questions in the below Jewelry Case study, in which you will act as a consultant making data supported recommendations to a client who desires to meet a specific profit goal (income after tax). You will :

 

  1. Create your own original  EXCEL file with price and cost  data from the case, separately showing all variable cost items  all fixed cost items, and the client’s current  price per UNIT  and number of UNITS sold. (10 points to fully meet requirements)

 

  1. In the same Excel file, create a contribution income statement, using the format in the case, (i.e., showing price x units sold (revenue), variable costs x units sold (total variable costs), contribution per unit and total contribution; total  fixed costs.  income before and after tax. (10 points to fully meet requirements)

 

  1. Calculate break even units at current price (10 points to fully meet requirements)

 

  1. Calculate the revenue required to meet income target after tax (profit) (10 points to fully meet requirements)

 

  1. First decision:  Raise price? Calculate the price per unit needed to reach the required income target (keeping the current volume of units sold). Explain why this might or might not be a good choice.  (10 points to fully meet requirements; 2 extra points possible for exceptional quality of explanation/rationale/format)

 

  1. Second decision: Increase volume? Calculate the units to be sold (volume) under current pricing in order to reach target income.  Explain why this might or might not be a good choice. (10 points to fully meet requirements; 2 extra points possible only for exceptional quality of explanation/rationale/format)

 

  1. Determine whether it is best to adjust price or  volume in order to reach the client’s  target income Compare the options and explain the rationale for your choice (10 points to fully meet requirements; 3 extra points possible only for exceptional quality of explanation/rationale/format)

 

  1. Prepare a narrated Powerpoint presentation to your client, summarizing your findings, your comparative analysis and your recommendations.  The narration should thoroughly reflect the logic of your analysis. (See the below  instructions on how to prepare a narrated Powerpoint presentation. (19  points to fully meet requirements; 4 extra points possible only for exceptional quality of the presentation)

 

Refer  to the below powerpoint, “Jewelry Case Hints”  for specific guidance through your analysis.

 

 

Assignment Guidelines (In this order- 1, Prepare an excel for the calculations, 2 word document which justify all statements and 3, a power point presentation)

  1. Show all your calculations.
  2. Use Excel in order to accomplish item 1 above.
  3. Describe and justify each assumption you have made,
  4. Explain, support and justify every statement you make.
  5. Support your conclusions with evidence (such as facts and statistics from reliable sources, quotes from the readings, or a well-reasoned logical argument).  Examples from your own experience are also helpful.

Please bear in mind that analyses and conclusions are only as good as the data and assumptions that they are based on;

So ALWAYS support all of your numbers or calculations with reasoning and explanations, and be sure to provide sources for all of your data.