The model to the right, although more complex than the models in Problems 1 and 2, is a very simple Income/Loss Statement for a manufacturing business. There are many simplifications in this model, but it is a very useful tool for analyzing profitability when numerous variables need to be considered. The model assumes that the variable values are known (deterministic), but this does not restrict us from asking numerous important "What-If" questions.

a) Build the model to calculate net income in the cells provided. (Note the various tax rates for EBT.)

b) Create a one-way data table of Sales Units vs. Net Income. Start sales units at 10,000 and end at 20,000, and increase in increments of 1,000.

c) Graph the data table information with a line graph that performs a break-even analysis. "Eye-Ball" the number of sales units that occurs at breakeven.

d) Use Goal Seek to find the exact value of unit price at breakeven.

Fill in the logic of the model in the cells provided.

Typical Income Statment for Manufacturing Buisness
Revenue	......(a)
COGS	.......(b)	Assumptions
Gross Profit		Sales Units=	20000
		Unit Price=	50
Vairable Cost	......(c)	COGS%	50%
Fixed Cost
Operating Expenses		Var. Cost%=	15%
		Fixed Cost=	200000
Net Operating Expenses		Interest Expense=	25000
		Tax Rate=	34%	(EBT > 75,000)	Step 3
Interest Expense		"" ""=	23%	(0<EBT<=75,000)	Step 2
		"" ""=	0%	(EBT<=0)	Step 1
Earnings Before Taxes (EBT)		Calculated Values
		....(a)	Revenue =	Sales Unit*Unit Price
Taxes	....(d)	.....(b)	COGS=	Revenue*COGS%
		.....(c)	Variable Cost=	Var. Cost%*Revenue
Net Income		......(d)	Taxes=	Tax Rate*EBT (note steps oin rate)