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Scenario 1 - Recovery & Efficiency: % Sales % Sales

This document contains 3 scenarios analyzing the financial performance of a company. Scenario 1 shows the current performance and improved performance with a 12% sales increase and efficiency gains. Scenario 2 models a decline in sales by 20% due to a recession along with efficiency measures. Scenario 3 shows a 20% sales decline with no changes. Key metrics like contribution margin, net operating income and break-even point are compared across the scenarios.

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junaid112
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36 views2 pages

Scenario 1 - Recovery & Efficiency: % Sales % Sales

This document contains 3 scenarios analyzing the financial performance of a company. Scenario 1 shows the current performance and improved performance with a 12% sales increase and efficiency gains. Scenario 2 models a decline in sales by 20% due to a recession along with efficiency measures. Scenario 3 shows a 20% sales decline with no changes. Key metrics like contribution margin, net operating income and break-even point are compared across the scenarios.

Uploaded by

junaid112
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Date Prepared:

Prepared By:

Scenario 1 - Recovery & Efficiency


% Sales
100.0%

Sales

4,093,000

Less Variable Costs:


Direct Materials
Direct Labor
Sales Commissions
Other Charges
Total Variable Costs

$
$
$
$
$

1,150,000
1,159,340
278,000
139,840
2,727,180

28.1%
28.3%
6.8%
3.4%
66.6%

Contribution Margin (Sales-VC)

1,365,820

33.4%

Less: Fixed Costs:


Advertising
Depreciation
Insurance
Mgmt and Office Payroll
Payroll Taxes
Rent
Utilities
Vehicle Expenses
Wages
Other Fixed Costs
Other Fixed Costs
Other Fixed Costs
Other Fixed Costs
Other Fixed Costs
Other Fixed Costs

% Change
Note
12.0% Recovering economy
% Change
-2.0% Buyer Program
-2.0% Contract Manager

New Result
4,584,160

% Sales
100.0%

Total Variable Costs

1,196,317
1,206,778
311,360
156,621
2,871,075

26.1%
26.3%
6.8%
3.4%
62.6%

Contribution Margin (Sales-VC)

1,713,085

37.4%

63,500
132,500
60,000
502,000
82,000
54,000
30,000
41,000
400,000
-

1.4%
2.9%
1.3%
11.0%
1.8%
1.2%
0.7%
0.9%
8.7%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

$ Change
45,000 Market Identity Program

$
$
$
$
$
$
$
$
$

18,500
132,500
54,000
450,000
82,000
48,000
30,000
26,000
400,000

0.5%
3.2%
1.3%
11.0%
2.0%
1.2%
0.7%
0.6%
9.8%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

Total Fixed Costs

1,241,000

30.3%

Total Fixed Costs

1,365,000

29.8%

Net Operating Income

124,820

3.0%

Net Operating Income


Change from Current Net Operating Income

348,085
223,265

7.6%
179%

Break-Even Sales =

3,652,696

Break-Even Sales =

3,718,948

6,000 Audit
52,000 Hire Office Manager
6,000 Satellite Office
15,000 Add pickup

Change from Current Breakeven

(66,251)

Scenario 2 - Survival & Efficiency


% Change
Note
-20.0% Bad economy
% Change
-2.0% Buyer Program
-2.0% Contract Manager
-0.8% Re-negotiate

New Result
3,274,400

Scenario 3 - Bad Economy, Do Nothing


% Sales
100.0%

% Change
-20.0%

Note

New Result
3,274,400

% Sales
100.0%

% Change

Total Variable Costs

854,512
861,984
196,205
111,872
2,024,573

26.1%
26.3%
6.0%
3.4%
61.8%

Contribution Margin (Sales-VC)

1,249,827

38.2%

$ Change
22,000 Increase ad spending
-14,000 Smaller audit
Fire Receptionist
Wages reduced
-12,000 Re-negotiate
-8,000 Sell vehicle

Total Fixed Costs


Net Operating Income
Change from Current Net Operating Income

Break-Even Sales =
Change from Current Breakeven

Total Variable Costs

920,000
927,472
222,400
111,872
2,181,744

28.1%
28.3%
6.8%
3.4%
66.6%

Contribution Margin (Sales-VC)

1,092,656

33.4%

18,500
132,500
54,000
450,000
82,000
48,000
30,000
26,000
400,000
-

0.6%
4.0%
1.6%
13.7%
2.5%
1.5%
0.9%
0.8%
12.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

1,241,000

37.9%

$ Change
40,500
132,500
40,000
450,000
82,000
36,000
30,000
18,000
400,000
-

1.2%
4.0%
1.2%
13.7%
2.5%
1.1%
0.9%
0.5%
12.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

1,229,000

37.5%

Total Fixed Costs

0.6%
-83%

Net Operating Income


Change from Current Net Operating Income

20,827
(103,993)

3,219,835
(499,112)

Break-Even Sales =
Change from Current Breakeven

(148,344)
(273,164)

3,718,948
-

-4.5%
-219%

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