GolfCo Variance Problem Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 New club volume 55,000 55,000 55,000 55,000 55,000 55,000 55,000 New club price 825 New club VMC 395 Prem club Volume (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) Prem club price 1,100 Prem club VMC 650 Disc club volume 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Disc club price 410 Disc club VMC 185 Sales 39,295,000 $ 39,295,000 $ 39,295,000 $ 39,295,000 $ 39,295,000 $ 39,295,000 $ 39,295,000 VMC $ 17,445,000 $ 17,445,000 S 17,445,000 17,445,000 $ 17,445,000 17,445,000 $ 17,445,000 Fixed Costs 9,200,000 9,200,000 9,200,000 $ 9,200,000 9,200,000 $ 9,200,000 9,200,000 Depreciation 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000 EBIT $ 8,450,000 8,450,000 $ 8,450,000 $ 8,450,000 8,450,000 8,450,000 $ 8,450,000 Taxes 40% 3,380,000 3,380,000 $ 3,380,000 $ 3,380,000 3,380,000 3,380,000 $ 3,380,000 NI 5,070,000 5,070,000 5,070,000 5,070,000 5,070,000 5,070,000 $ 5,070,000 Depreciation 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 Capital Expenditure (29,400,000) A NWC (1,400,000) $ 1,400,000 Total Cash Flow (30,800,000) $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 10,670,000 NPV @ 10% $ 15,048,663.81 IRR 23.46% Payback 3.32 YearsSales Variance GolfCo Variance Problem Total Budget Actual Budget Actual Variance Year Year 1 Unit Price Sales SM Units Price Sales SM Total $ Volume Price Mix Sum New club volume 55,000 55,000 New clubs 55,000 $ 825 $ 45,375 $5,000 $ 825 $ 45,375 New club price 825 825 Premium clubs 65,000 $ 1,100 $ 71,500 60,000 $ 1,000 $ 60,000 ur New club VMC 395 400 Disc. Clubs 112,000 $ 410 $ 45,920 120,000 $ 420 $ 50,400 Total 232,000 $ 701.70 162,795 235,000 $ 662.87 155,775 VMC Variance Prem club Volume 65,00 60,000 Prem club price $ 1,100 S 1,000 Budget Actua Variance Prem club VMC 650 665 Units Var Cost VMC $M Units Var Cost VMC $M Total $ Volume Price Mix Sum New clubs $5,000 $ 395 $ 21,725 $5,000 $ 400 $ 22,000 Disc club volume 112,000 120,000 Premium clubs 65,000 650 $ 42,250 60,000 665 $ 39,900 Disc club price 410 420 Disc. Clubs 112,000 $ 185 $ 20,720 120,000 $ 190 $ 22,800 Disc club VMC 185 190 Total 232,000 $ 365.06 84,695 235,000 $ 360.43 84,700 Total Units 232,000 235,000 Due To: $ % Sales $ per Unit $ % Sales $ per Unit ($000's) Volume Rate Mix Total Sales $ 162,795,000 100.00% $ 701.70 155,775,000 100.00% $ 662.87 Sales (7,020 VMC $ 84,695,000 52.03% $ 365.06 84,700,000 54.37% $ 360.43 VMC (5) Gross Profit $ 78,100,000 47.97% $ 336.64 71,075,000 45.63% $ 302.45 Gross Profit (7,025) Fixed Costs $ 24,200,000 14.87% $ 104.31 24,500,00 15.73% $ 104.26 Fixed Costs 300 Depreciation $ 23,700,000 14.56% $ 102.16 23,500,000 15.09% $ 100.00 Depreciation 200 EBIT $ 30,200,000 18.55% $ 130.17 23,075,000 14.81% $ 98.19 EBIT (7,125) Taxes 40% $ 12,080,000 7.42% $ 52.07 9,230,000 5.93% $ 39.28 Taxes 2,850 NI $ 18,120,000 11.13% $ 78.10 13,845,000 8.89% $ 58.91 NI (4,275)

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GolfCo Variance Problem New club volume Year 1 55,000 Year 2 Year 3 Year 4 55,000 55,000 55,000 Year 5 55,000 Year 6 55,000 Year 7 55,000 New club price $ 825 New club VMC $ 395 Prem club Volume (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) Prem club price Prem club VMC $ es es $ 1,100 650 Disc club volume 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Disc club price Disc club VMC eses $ 410 $ 185 Sales $ 39,295,000 $ VMC $ 17,445,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 39,295,000 17,445,000 $ 17,445,000 $ 17,445,000 Fixed Costs $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 Depreciation $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 EBIT Taxes NI $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 40% $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 Depreciation $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 Capital Expenditure S (29,400,000) A NWC $ (1,400,000) $ 1,400,000 Total Cash Flow $ (30,800,000) $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 10,670,000 NPV @ 10% $ IRR 15,048,663.81 23.46% Payback 3.32 Years GolfCo Variance Problem New club volume Year 1 55,000 Year 2 Year 3 Year 4 55,000 55,000 55,000 Year 5 55,000 Year 6 55,000 Year 7 55,000 New club price $ 825 New club VMC $ 395 Prem club Volume (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) Prem club price Prem club VMC $ es es $ 1,100 650 Disc club volume 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Disc club price Disc club VMC eses $ 410 $ 185 Sales $ 39,295,000 $ VMC $ 17,445,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 39,295,000 $ 17,445,000 $ 39,295,000 $ 39,295,000 17,445,000 $ 17,445,000 $ 17,445,000 Fixed Costs $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 $ 9,200,000 Depreciation $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 EBIT Taxes NI $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 $ 8,450,000 40% $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 3,380,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 $ 5,070,000 Depreciation $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 $ 4,200,000 Capital Expenditure S (29,400,000) A NWC $ (1,400,000) $ 1,400,000 Total Cash Flow $ (30,800,000) $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 9,270,000 $ 10,670,000 NPV @ 10% $ IRR 15,048,663.81 23.46% Payback 3.32 Years