Option 1 – Sell shirts at a discount to catalog subscribers This option recommen

Question

Option 1 – Sell shirts at a discount to catalog subscribers

This option recommends that HP send a letter to all catalog subscribers with a list of all unsold shirts that are being offered at a discount. Column G shows the discount percentage for each shirt style. Column H should contain the formulas needed to calculate the total potential revenue for each shirt style. To explain how the calculations are made, consider the Tropics Shirts (row 8) as an example. Cells D8 and E8 indicate that there are 50 Tropics Shirts left unsold. Cell F8 shows the standard revenue for each Tropics Shirt is $40.00; this would normally generate $2,000.00 in revenue. Cell G8 shows the discount on the regular price is 40%. The total potential revenue for these shirts would now be 60% of $2000.00 or $1200.00. In cell H8, enter an expression that calculates the potential discounted revenue for the Tropics Shirt style. Copy this expression down the range H8:H29. Enter a function in cell H30 that totals all the revenue in this column.

Option 2 – Sell shirts to a liquidator

Fly-By-Night Liquidators (FBNL) offers to buy the unsold inventory at a deep discount. Column I shows the price per 100 shirts that they are offering. Column J should contain the formulas needed to calculate the total potential revenue for each shirt style. Using the Tropics Shirts as an example again, if FBNL purchases the unsold shirts at $600.00 for 100 shirts, the 50 unsold Tropics Shirts would generate $300.00 of revenue. In cell J8, enter an expression that calculates the potential revenue for the Tropics Shirt style. Copy this expression down the range J8:J29. Enter a function in cell J30 that totals all the revenue in this column.

Option 3 – Return shirts to manufacturer for a refund

Acme Textiles manufactures all of HP’s shirts. They have offered to allow HP to return the unsold shirts for a refund of $6.50 per shirt (any style), if HP pays all shipping costs. Column K shows the shipping costs per 10 shirts for each style. The cells in column L should contain the formulas needed to calculate the potential revenue for each shirt style. Using the Tropics Shirts again as an example, if Acme refunds $6.50 for each of the 50 unsold shirts, this would generate $325.00 of revenue. However, it costs $4.50 per 10 shirts to ship them back, or $22.50 in shipping costs. The net revenue for Tropics Shirts would then be reduced from $325.00 to $302.50. In cell L8, enter an expression that calculates the potential net revenue for the Tropics Shirt style. Copy this expression down the range L8:L29. Enter a function in cell L30 that totals all the revenue in this column.

Explanation / Answer

Option 1

potential revenue = (quantity ordered - quanity sold)*standard revenue per shirt*(1-discount)

H8 =((D8-E8)*F8)*(1-G8)

Total cost, H30 =sum(H8:H29)

Option 2

potential revenue = (quantity ordered - quanity sold)*purchase offer per 100 shirts/100

J8 =(D8-E8)*(I8/100)

Total cost, J30 =sum(J8:J29)

Option 3

potential revenue = (quantity ordered - quanity sold)*(refund per shirt - (shipping cost/10))

L8 =(D8-E8)*(6.5-(K8/10))

Total cost, L30 =sum(L8:L29)

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