Click in the ‘By changing cell’ box and select cell C4, the cell with the variable that you want to change.Įxcel suggests that if you 50% of your cycles produced to open market you will earn a profit of `500000.Click in the ‘To value’ box and type the desired output `500000.Select cell D10, the cell with the output formula in ‘set cell’ box.On the Data tab, click What-If Analysis and then click Goal Seek.To determine the proportion required to be sold in open market to achieve the profit of `500000, follow the following steps: The alternative formula to determine the total profit could be =C7*F7+C8*F8-D9 You need to remember that goal seek can suggest changes in one variable only. If you wish to know what percentage of units produced should be sold in open market in order to make a profit of `500000, you may use goal seek. If you know your target and you want to find out what should be the value of an input to achieve the desired result, you may use goal seek.įor the current business situation, the profit earned is `460000. There are three kinds of What-If Analysis tools: The use of What-If Analysis tools in Excel allows you changing the values in cells to see how those changes will affect the outcome of formulas on the worksheet. To answer such problems we may use What-if-analysis tool of excel. (4) What will happen to profits if more than two variables change? (3) If we vary both sales price per unit in open market and the proportion sold in open market how will it affect your total profit? (2) If sales price per unit in open market assumes a number of hypothesized prices how will it affect your total profit? (1) What percentage of units produced you should sell in open market in order to achieve a target profit? Currently you sell 40% of your production in the open market.Īs a businessman you may think of various situations that you may encounter in future because of changes in any of the variables that affect your profits.
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There is a fixed cost of production `100000. You have two options to sell them, selling to approved stockists at a unit price of `1100 or selling in open market for a unit price of `1200.
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Imagine that you are a cycle manufacturer who manufactures 2000 cycles per annum at a unit cost of ` 800. The book's focus is on the application part while providing basic information about computers for first-time readers. It is a comprehensive & authentic textbook written to impart computer skills and knowledge to commerce students & enhance their understanding of information technology tools in handling business operations. Also, Check out Taxmann's Basics of Computer Applications in Business.