The Pet Paradise Pet Shop, specialized in selling pet houses, is currently facing profitability challenges. The founder, Lisa, recognizes your expertise in business knowledge and financial acumen and seeks your advice to determine crucial sales targets for breaking even and achieving specific profit margins.

Key Financial Parameters:

Fixed Costs:

The fixed costs for Pet Paradise Pet Shop amount to $$25,000$ annually.

Variable Costs:

The variable cost associated with each pet house sold is $$150.$

Product Price:

The selling price for each pet product is $$450.$

Goals for Analysis:

Lisa wants to understand the sales targets required to achieve the following financial milestones:

a$.$ Break$-$even Point:

Determine the number of pet houses Pet Paradise needs to sell annually to cover the fixed and variable costs, resulting in a break$-$even situation.

b$.$ Profit of $$50,000$:

Identify the sales volume needed to generate a profit of $$50,000$ after covering fixed and variable costs.

c$.$ Profit of $$150,000,000$:

Determine the sales target required to achieve a profit of $$150,000,$ taking into account fixed and variable costs.

c$.$ Profit of $$250,000,000$:

Determine the sales target required to achieve a profit of $$150,000,$ taking into account fixed and variable costs.

Excel Analysis Using Goal Seek:

Utilize Goal Seek in Excel to perform the financial analysis based on the given parameters:

Fixed Costs: $25,000$

Variable Costs: $$150$

Product Price: $$450$

Remember to set up the Excel sheet with the appropriate formulas and use the Goal Seek feature to iteratively determine the required sales volume for each scenario. Save each scenario in separate worksheet.

Your insights into these key financial metrics will provide valuable guidance to the Pet Paradise Pet Shop in establishing achievable sales targets and enhancing overall business profitability.

Answer rating: 100% (QA)

To assist Lisa in determining crucial sales targets Ill set up an Excel sheet with appropriate formu... View the full answer