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					                            TheZone - Apparel Division - Swimwear Products
                             Projected Profitability and Break-Even Analysis
                                   For the Year Ended Dec 31, 2010

               Created by: Richard Rayburn
                      On: 20-May-10

          Last Updated by:
                      On:

Purpose of workbook:         This workbook was created to analyze the profitability
                             of a new product, currently called the TZSwimSkin.


How to use this workbook:    Enter the various estimates in the assumptions
                             section of the SwimSkin Projections worksheet to see the
                             effects of the values on the projected income
                             statement and data tables.

Assumptions inherent         The assumptions are based on data provided by TheZone's
in workbook model:           Sales Department, including estimates of units sold and
                             sales price per unit.
                                         TheZone - Apparel Division - TZSwimSkin
                                       Projected Profitability and Break-Even Analysis
                                             For the Year Ended Dec 31, 2010

Assumptions:                                                     Projections:

Regarding revenues
             Sales in units                 3,000                Sales
             Selling price per unit    $   129.95                COGS
Regarding variable expenses per unit                             Gross profit
             COGS                      $    75.75                Other variable expenses:
             Distribution              $     5.00                  Distribution expense
Regarding marginal fixed expenses                                Contribution margin
             Marketing                 $   75,000                Fixed expenses:
             Payroll                   $   52,000                  Marketing
             Estimated overhead        $   18,000                  Payroll
                                                                   Overhead
                                                                 Total fixed expenses
                                                                 Marginal income before taxes
s




                 $   389,850
                     227,250
                     162,600

                      15,000
                     147,600

    $   75,000
        52,000
        18,000
                     145,000
                 $     2,600
                                                            TheZone - Apparel Division - Swimwear
                                                             Projected Marginal Income Statement
                                                               For the Year Ended Dec 31, 2010

Assumptions:                              Swimsuit Style Categories
                                                              Women's One- Women's Two-
                                   Men's Racers Men's Trunks Piece Racers   Piece Suits
Regarding revenues
              Units sold             10,000       10,000                      5,000         7,000
              Unit sales price $       39.95 $      49.95         $           44.95   $     44.95
Regarding variable expenses (per unit)
              COGS             $       17.00 $      17.00         $           35.75   $     37.75
              Distribution     $        2.00 $       3.50         $            3.00   $      3.00
Regarding marginal fixed and step-variable expenses
              Marketing        $       7,000 $    10,000          $           8,000   $     8,000

               Average salary per swimsuit line employee                              $    38,500
               Number of employees need (based on unit sales)                                   5
               Total payroll at estimated units sold (not grouped by style)           $   192,500
               Estimated overhead (not grouped by style)                              $   175,000
Other items
               Marginal tax rate                                                             35%

                                    Number of
               Total Units Sold     Employees
                Greater Than:        Needed:
                               0            5.0
                       200,000              5.5
                       250,000              6.0
                       300,000              6.5
                       350,000              7.0
                       400,000              7.5
 wear
ment
10

        Projections:




        Sales                                $ 1,438,400
        COGS                                     783,000
        Gross profit                             655,400
        Other variable expenses:
          Distribution expense                    91,000
        Contribution margin                      564,400
        Fixed expenses:
          Marketing               $ 33,000
          Payroll                  192,500
          Overhead                 175,000
        Total fixed expenses                     400,500
        Marginal income before taxes             163,900
        Estimated income tax expense              57,365
        Marginal net income                  $   106,535
                                            TheZone - Apparel Division - TZSwimSkin
                                           Projected Profitability Analysis via Simulation
                                                For the Year Ended Dec 31, 2010

Assumptions:                                                               Projections:

Regarding revenues
 Sales in units (generated from probability distribution                   Sales
   table using a random number)                                            COGS
 Selling price per unit                     $        129.95                Gross profit
Regarding variable expenses per unit                                       Other variable expenses:
 COGS                                       $          69.75                 Distribution expense
 Distribution                               $           5.00               Contribution margin
Regarding marginal fixed expenses                                          Fixed expenses:
 Marketing                                  $        75,000                  Marketing
 Payroll                                    $        52,000                  Payroll
 Estimated overhead                         $        18,000                  Overhead
                                                                           Total fixed expenses
                                                                           Marginal income before taxes

    Unit Sales Probabilities
                   Individual
     Units        Probability
          1,000             25%
          2,000             40%
          3,000             20%
          4,000             10%
          5,000               5%
                           100%
                          $        -
                                   -
                                   -

                                   -
                                   -

             $   75,000
                 52,000
                 18,000
                               145,000
e before taxes            $   (145,000)

				
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