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This exercise provides you the opportunity to apply break-even analysis concepts and Excel skills to a case study problem. The activity continues our work with Mars Inc. M&M candies.

Assignment

Your company is a wholesaler of Mars candies, where you are responsible for the M&M product line. Mars has given you some pricing forecast data concerning 2021 product prices and payment terms. You need to determine the break-even points for your facility based on the information detailed below.

**Plain M&M Analysis: **You have identified the following 2021 price points on cases of Plain M&M candies from five different suppliers (variable costs)

- Supplier A: 48-count 1.74 oz bags will have a cost of $15.91 per case
- Supplier B: 48-count 1.74 oz bags will have a cost of $15.65 per case
- Supplier C: 48-count 1.74 oz bags will have a cost of $14.75 per case
- Supplier D: 48-count 1.74 oz bags will have a cost of $14.91 per case
- Supplier E: 48-count 1.74 oz bags will have a cost of $15.00 per case

Your additional costs are below:

- Fixed costs for your warehouse are $4,500,000 annually
- The selling price per case is $32.99
- Labor costs (variable cost) for the warehouse are $5.67 per case
- Marketing costs (variable cost) for the candy are $2.00 per case

Assignment:

* Part #1: *You need to analyze the break-even point for each of the listed supplier options

In the Excel document for this assignment, there are five tabs named “Part #1 Supplier A” through “Part #1 Supplier E”. Each tab represents one of the five payment options. Complete the indicated break-even analysis by filling in the indicated columns, cells, and graphs. Remember, every chart must have a title, axis labels, axis titles, and a legend.

Determine the supplier option that results in the lowest break-even point based on the number of cases and dollars *(** Hint – it should be the same price point option for both the number of cases and dollars). * Complete the information on the “Conclusions” tab for Part #1.

* Part #2: *The market has changed. Your VP of sales indicates that the market will support a

$35.00 per case selling price. To accomplish this, however, marketing costs will need to be increased by 25%. You need to analyze the break-even point for the option you selected with the lowest break-even point in Part #1. Use the “Part #2” tab in the document for your analysis. Complete the information on the “Conclusion” tab for Part #2.

* Part #3* – Finally, answer the question on the “Conclusions” tab for Part #3.

Submit one file with the filename **Breakeven.xlsx**

Grading:

Part #1:

Break-even graph for optimal option 10 points

*Graph**Title**1**point**x-axis**title**1 point**x-axis**labels**1**point**y-axis**title**1 point**y-axis**labels**1**point**Legend**2**points**Data lines (fixed costs, revenue, and total costs)**3**points*

Correct break-even point (in units) for each supplier option (2 points each) 10 points Correct break-even point (in dollars) for each supplier option (2 points each) 10 points

Part #2:

Correct new break-even point (in units) for optimal supplier option 2 points Correct new break-even point (in dollars) for optimal supplier option 2 points

New break-even graph for the optimal option 10 points

*Graph**Title**1**point**x-axis**title**1 point**x-axis**labels**1**point**y-axis**title**1 point**y-axis**labels**1**point**Legend**2**points**Data lines (fixed costs, revenue, and total costs)**3**points*

Conclusions

Part #1:

**Identification of optimal options:**

**Optimal option****1 point****BEPU****1 point****BEP$****1 point**

Part #2:

**Identification of new break-even points:**

**BEPU****1 point****BEP$****1 point**

Part #2:

**Reflection****6 points**

Total Points: 55 points

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