INSTRUCTIONS
Format
- . Use creditable and verified sources. You may pull public numbers from Starbucks from SEC and other creditable sources. Please refer to rubric, example projects and YouTube videos. Need a POWERPOINT to accompany the project. (no more than 10 slides) Please also see instructions included: Learning objective: Students will create a multi-product profitability analysis that can be used to determine the effects of changing business conditions on the client's financial position. Specifically, students will calculate breakeven points, operating income, the weighted average contribution margin, margin of safety, operating leverage, and so forth. Students will be guided to use Excel in such a way that any changes to the assumptions will correctly ripple through the entire profitability analysis, enabling the client to use this spreadsheet model over and over, using different "what if" assumptions. Finally, students will advise the client of three potential changes to the business cost structure. There are several follow my examples in the relevant Chapters in the textbook. Focus on (Chapter 15, pp. 756-787) and 14th Edition on (Chapter 15 Slides).
Click to access Excel folder for an example:
https://sites.google.com/case.edu/excel-for-management-acctg/cvp-analysis
This is the starting Excel file given to students. It contains the business description, directions, and a template for the CVP model. A few check figures are also included. It also contains three "what if" scenarios to be used in advising the client. Finally, it includes a suggested grading rubric. Please notice the tabs at the bottom of the workbook.
Required Components of CVP analysis
There are several different components that together make up CVP analysis. These components involve various calculations and ratios, which will be broken down in more detail in this guide.
The main components of CVP analysis are:
- CM ratio and variable expense ratio
- Break-even point (in units or dollars)
- Margin of safety
- Changes in net income
- Degree of operating leverage
Additional Guidance:
https://corporatefinanceinstitute.com/resources/knowledge/finance/cvp-analysis-guide/
https://www.thebalancesmb.com/how-to-do-cost-volume-profit-analysis-an-introduction-393475