Scenario: Launching a New Product A company is considering launching a new product. They have developed...
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Scenario: Launching a New Product A company is considering launching a new product. They have developed a basic profit model that depends on two primary variables: Unit Selling Price and Number of Units Sold. They want to perform a sensitivity analysis to understand how variations in these variables would affect their profit. Data: Fixed Costs (development, marketing, etc.): $100,000 Variable Cost per Unit (production, shipping, etc.): $20 Expected Unit Selling Price: $50 Expected Number of Units Sold: 3,000 units Assignment Steps: 1. Baseline Profit Calculation: Calculate the expected profit using the given data. 2. Sensitivity Analysis: For the Unit Selling Price: Vary the selling price by -10%, -5%, 0% (baseline), +5%, and +10%. For the Number of Units Sold: Vary the units sold by -10%, -5%, 0% (baseline), +5%, and +10%. To Complete the Assignment: Step 1: Use the given data to compute the baseline profit. Step 2: Adjust the variables (Unit Selling Price and Number of Units Sold) by the specified percentages. Step 3: Calculate the profit for each combination. Step 4: Analyze and answer the questions. First Question Please fill in the blank cells of the 'Sensitivity Analysis of Profit' table below. Some entries are already provided as a reference (10 points) Lab 4 APAustin Peay State University CLARKSVILLE: TENNESSEE College of Business MGT 5055 % Change Unit Selling Price Profit with Price Change Number of Units Sold Profit with Units Change 0% $50 -$10,000 3,000 -$10,000 +5% $52.5 -$2,500 3,150 -$5,500 Second Question Is profit/loss more sensitive to changes in the unit selling price or to changes in the number of units sold? (5 points) Epected Unit Selling Price Expected Number of Units Sold Fixed Costs Variable Cost $50 3000 $100,000 $20 % of Change Unit Selling Price Profit with Price Change Number of Units Sold Profit with Units Change -10% $45.00 -5% $47.50 0% $50.00 5% $52.50 10% $55.00 2,700 2,850 ($10,000) 3,000 ($2,500) 3,150 ($10,000) ($5,500) 3,300 0% -10% Profit= Total Revenue-Total cost ($10,000) ($32,500) Total Revenue= Unit Selling price * Number of Units Sold $150,000 $121,500.00 Total Cost Fixed Cost + Variable Cost $160,000 Variable Costs = Per Unit * Number of Units Sold $60,000 $154,000 $54,000 -5% ($21,625) $135,375.00 $157,000 $57,000 5% $2,375 $165,375.00 $163,000 $63,000 10% $15,500 $181,500.00 $166,000 $66,000 Scenario: Launching a New Product A company is considering launching a new product. They have developed a basic profit model that depends on two primary variables: Unit Selling Price and Number of Units Sold. They want to perform a sensitivity analysis to understand how variations in these variables would affect their profit. Data: Fixed Costs (development, marketing, etc.): $100,000 Variable Cost per Unit (production, shipping, etc.): $20 Expected Unit Selling Price: $50 Expected Number of Units Sold: 3,000 units Assignment Steps: 1. Baseline Profit Calculation: Calculate the expected profit using the given data. 2. Sensitivity Analysis: For the Unit Selling Price: Vary the selling price by -10%, -5%, 0% (baseline), +5%, and +10%. For the Number of Units Sold: Vary the units sold by -10%, -5%, 0% (baseline), +5%, and +10%. To Complete the Assignment: Step 1: Use the given data to compute the baseline profit. Step 2: Adjust the variables (Unit Selling Price and Number of Units Sold) by the specified percentages. Step 3: Calculate the profit for each combination. Step 4: Analyze and answer the questions. First Question Please fill in the blank cells of the 'Sensitivity Analysis of Profit' table below. Some entries are already provided as a reference (10 points) Lab 4 APAustin Peay State University CLARKSVILLE: TENNESSEE College of Business MGT 5055 % Change Unit Selling Price Profit with Price Change Number of Units Sold Profit with Units Change 0% $50 -$10,000 3,000 -$10,000 +5% $52.5 -$2,500 3,150 -$5,500 Second Question Is profit/loss more sensitive to changes in the unit selling price or to changes in the number of units sold? (5 points) Epected Unit Selling Price Expected Number of Units Sold Fixed Costs Variable Cost $50 3000 $100,000 $20 % of Change Unit Selling Price Profit with Price Change Number of Units Sold Profit with Units Change -10% $45.00 -5% $47.50 0% $50.00 5% $52.50 10% $55.00 2,700 2,850 ($10,000) 3,000 ($2,500) 3,150 ($10,000) ($5,500) 3,300 0% -10% Profit= Total Revenue-Total cost ($10,000) ($32,500) Total Revenue= Unit Selling price * Number of Units Sold $150,000 $121,500.00 Total Cost Fixed Cost + Variable Cost $160,000 Variable Costs = Per Unit * Number of Units Sold $60,000 $154,000 $54,000 -5% ($21,625) $135,375.00 $157,000 $57,000 5% $2,375 $165,375.00 $163,000 $63,000 10% $15,500 $181,500.00 $166,000 $66,000
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