1 Seven-Year Financial Projection

Problem: As the spreadsheet specialist at Shawshank Manufacturing, you have been asked to create a worksheet thatwill project the annual gross margin, expenses, operating income,income taxes, and net income for the next seven years based on theassumptions in Table 3-9. The desired worksheet is shown inFigure 3-85.

Instructions Part 1: Complete the following steps to create theworksheet shown in Figure 3-85.

1. Bold the entire worksheet. Enter the worksheet titles in cellsA1 and A2. Enter the system date in cell H2 using the NOW function. Format the date to the 3/14/2001style.

2. Enter the seven column titles 2004 through 2010 in the range B3:H3 by entering 2004 in cell B3, and then,while holding down the CTRL key, dragging cell B3’s fill handle. Format cell B3 as follows: (a) change thenumber in cell B3 to text by assigning it the format Text in the Format Cells dialog box; (b) center and itali-cize cell B3; (c) rotate its contents 45°. Use the Format Painter button to copy the format assigned to cell B3to the range C3:H3.

3. Enter the row titles in the range A4:A24. Add heavy bottom borders to the ranges A3:H3 and B5:H5.4. Change the following column widths: A = 24.71; B through H = 11.00. Change the heights of rows 7, 13,

15, 16, and 17 to 24.00.5. Enter the assumptions values in Table 3-9 in the range B20:B24. Use format symbols.6. Assign the Comma style format with no decimal places to the range B4:H17.7. Complete the following entries:

a. 2004 Total Net Revenue (cell B4) = Units Sold in Year 2003 * (Unit Cost / (1 – Margin)) or =B20 * (B21 / (1 – B24))

b. 2005 Total Net Revenue (cell C4) = 2004 Total Net Revenue * (1 + Annual Sales Growth) * (1 – AnnualPrice Decrease) or =B4 * (1 + $B$22) * (1 – $B$23)

c. Copy cell C4 to the range D4:H4.d. 2004 Cost of Goods Sold (cell B5) = 2004 Total Net Revenue – (2004 Total Net Revenue * Margin) or

=B4 * (1 – $B$24)e. Copy cell B5 to the range C5:H5.f. 2004 Gross Margin (cell B6) = 2004 Total Net Revenue – 2004 Cost of Goods Sold or =B4 – B5g. Copy cell B6 to the range C6:H6.h. 2004 Advertising (cell B8) = 500 + 13% * 2004 Total Net Revenue or =500 + 13% * B4i. Copy cell B8 to the range C8:H8.j. Maintenance (row 9): 2004 = 1,900,000; 2005 = 5,397,000; 2006 = 4,200,000; 2007 = 5,150,000;

2008 = 2,500,000; 2009 = 3,150,000; 2010 = 2,960,000k. 2004 Rent (cell B10) = 1,800,000l. 2005 Rent (cell C10) = 2004 Rent + 10% * 2004 Rent or =B10 * (1 + 10%)m. Copy cell C10 to the range D10:H10.n. 2004 Salaries (cell B11) = 22% * 2004 Total Net Revenue or =22% * B4

Units Sold in Year 2003 12,459,713

Unit Cost $12.96

Annual Sales Growth 4.25%

Annual Price Decrease 3.75%

Margin 39.25%

Table 3-9 Shawshank Manufacturing Assumptions

EX 212 • Excel Pro ject 3Microsoft Office

Excel 2003

o. Copy cell B11 to the range C11:H11.p. 2004 Supplies (cell B12) = 1.5% * 2004 Total Net Revenue or =1.5% * B4q. Copy cell B12 to the range C12:H12.r. 2004 Total Expenses (cell B13) = SUM(B8:B12)s. Copy cell B13 to the range C13:H13.t. 2004 Operating Income (cell B15) = 2004 Gross Margin – 2004 Total Expenses or =B6 – B13u. Copy cell B15 to the range C15:H15.v. 2004 Income Taxes (cell B16): If 2004 Operating Income is less than 0, then 2004 Income Taxes equal 0;

otherwise 2004 Income Taxes equal 40% * 2004 Operating Income or =IF(B15 < 0, 0, 40% * B15)w. Copy cell B16 to the range C16:H16.x. 2004 Net Income (cell B17) = 2004 Operating Income – 2004 Income Taxes or =B15 – B16y. Copy cell B17 to the range C17:H17.

FIGURE 3-85

(continued)

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Seven-Year Financial Projection (continued)

8. Change the font in cell A1 to 36-point Franklin Gothic Medium (or a similar font). Change the font in cellA2 to 16-point Franklin Gothic Medium (or a similar font). Change the font in cell H2 to 10-point CenturyGothic (or a similar font). Change the font in cells A7, A13, A15, and A17 to 12-point Franklin GothicMedium. Change the font size in cell A19 to 14 point and underline the characters in the cell. Change thebackground and font colors and add drop shadows as shown in Figure 3-85 on the previous page.

9. Enter your name, course, laboratory assignment (Lab 3-1), date, and instructor name in the range A27:A31.Save the workbook using the file name, Lab 3-1 Shawshank Manufacturing Seven-Year Financial Projection.

10. Use the Page Setup command on the File menu to fit the printout on one page in portrait orientation. Preview and print the worksheet. Preview and print the formulas version (CTRL+`) of the worksheet in land-scape orientation using the Fit to option button in the Page Setup dialog box. After printing the formulasversion, reset the print scaling to 100%. Press CTRL+` to instruct Excel to display the values version of theworksheet. Save the workbook again.

11. Zoom to: (a) 200%; (b) 75%; (c) 25%; and (d) 100%.

Instructions Part 2: Open the workbook created in Part 1. Draw a 3-D Column chart (Figure 3-86) that compares the projected net incomes for the years 2004 through 2010. Use the nonadjacent ranges B3:H3 andB17:H17. Because the desired x-axis labels 2004 through 2010 in the range B3:H3 were entered as numbers inStep 2 on page EX 212, do the following when the ChartWizard – Step 2 of 4 – Chart Source Data dialog boxappears: (1) click the Series tab; (2) remove Series 1 from the Series list if necessary; and (3) type =sheet1!b3:h3in the Category (X) axis labels box. Add the chart title and format it as shown in Figure 3-86. To change the color of the columns, right-click a column and then click Format Data Series on the shortcut menu. To change the color of the walls behind and to the left of the columns, right-click a wall and then click Format Walls on the shortcut menu. Rename and rearrange the sheets, and color their tabs as shown in Figure 3-86. Save the workbook using the same file name (Lab 3-1Shawshank Manufacturing Seven-Year Financial Projection) as defined in Part 1. Print both sheets.

FIGURE 3-86

EX 214 • Excel Pro ject 3Microsoft Office

Excel 2003

Instructions Part 3: Open the workbook created in Part 2. If the 3-D Column chart is on the screen, click the Seven-Year Financial Projection tab to view the worksheet. Divide the window into two panes by draggingthe horizontal split box between rows 6 and 7. Use the scroll bars to show both the top and bottom of the worksheet.

Using the numbers in columns 2 and 3 of Table 3-10, analyze the effect of changing the annual sales growth(cell B22) and annual price decrease (cell B23) on the annual net incomes in row 17. The resulting answers arein column 4 of Table 3-10. Print both the worksheet and chart for each case.

Close the workbook without saving it, and then reopen it. Use the Goal Seek command to determine a mar-gin (cell B24) that would result in a net income in 2010 of $5,000,000 (cell H17). You should end up with amargin of 41.63% in cell B24. After you complete the goal seeking, print only the worksheet. Do not save theworkbook with the latest changes.

2 Profit Center Analysis of Indirect Expense Allocations

Problem: You are a summer intern at the elegant five-star Casa Grande Resort & Spa. Your work-study advisor at school and your supervisor have agreed on a challenging Excel project for you to do. They want youto create an indirect expense allocation worksheet (Figure 3-87 on the next page) that will help the resort andspa administration better evaluate the profit centers described in Table 3-11.

Banquet Business Conference Gift Children’s Spa Lounge Room Restaurant Center Rooms Shop Game Room

Total Net Revenue 78865 492800 486725 592500 225125 196475 88450 19450

Cost of Sales 36715 136500 106500 325600 14790 45125 37000 8650

Direct Expenses 14750 152975 53890 252975 8435 22475 31800 6940

Square Footage 2500 5100 8800 6000 900 5700 750 1200

Table 3-11 Casa Grande Resort & Spa Worksheet Data

(continued)

Annual Sales Annual Price 2010 Resulting Case Growth Decrease Net Income

1 18.25% 2.75% 6,454,088

2 20.25% –2.75% 11,914,998

3 34.35% 15.45% 5,732,746

Table 3-10 Shawshank Manufacturing Data to Analyze and Results

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Profit Center Analysis of Indirect Expense Allocations (continued)

FIGURE 3-87

Instructions Part 1: Do the following to create the worksheet shown in Figure 3-87.

1. Bold the entire worksheet. Enter the worksheet titles in cells A1 and A2 and the system date in cell J2. Format the date to the 3/14/2001 style.

2. Enter the column titles and the first three rows of numbers in Table 3-11 on the previous page in rows 3through 6. In row 3, use ALT+ENTER so the column titles show on two lines in a cell. Center and italicize thecolumn headings in the range B3:J3. Add a bottom border to the range B3:J3. Select the range J4:J6 andclick the AutoSum button. Freeze rows 1 through 3 and column A.

3. Enter the Square Footage row in Table 3-11 in row 16. Select cell J16 and use the AutoSum button to deter-mine the sum of the values in the range B16:I16. Change the height of row 16 to 39.00 and vertically centerthe range A16:J16.

4. Change the following column widths: A = 26.00; B through I = 12.00, and J = 13.00. 5. Enter the remaining row titles in the range A7:A17 as shown in Figure 3-87. Increase the font size in cells

A7, A14, and A15 to 12-point.6. Copy the row titles in range A8:A13 to the range A18:A23. Enter the numbers shown in the range B18:B23

of Figure 3-87 with format symbols.7. The planned indirect expenses in the range B18:B23 are to be prorated across the profit center as follows:

Administrative (row 8), Energy (row 10), and Marketing (row 13) on the basis of Total Net Revenue (row 4); Depreciation (row 9), Insurance (row 11), and Maintenance (row 12) on the basis of SquareFootage (row 16). Use the following formulas to accomplish the prorating.

EX 216 • Excel Pro ject 3Microsoft Office

Excel 2003

a. Spa Administrative (cell B8) = Administrative Expenses * Spa Total Net Revenue / Resort Total Net Revenue or =$B$18 * B4 / $J$4

b. Spa Depreciation (cell B9) = Depreciation Expenses * Spa Square Footage / Total Square Footage or=$B$19 * B16 / $J$16

c. Spa Energy (cell B10) = Energy Expenses * Spa Total Net Revenue / Resort Total Net Revenue or=$B$20 * B4 / $J$4

d. Spa Insurance (cell B11) = Insurance Expenses * Spa Square Feet / Total Square Footage or =$B$21 * B16 / $J$16

e. Spa Maintenance (cell B12) = Maintenance Expenses * Spa Square Footage / Total Square Footage or=$B$22 * B16 / $J$16

f. Spa Marketing (cell B13) = Marketing Expenses * Spa Total Net Revenue / Resort Total Net Revenue or=$B$23 * B4 / $J$4

g. Spa Total Indirect Expenses (cell B14) = SUM(B8:B13)h. Spa Net Income (cell B15) = Revenue – (Cost of Sales + Direct Expenses + Total Indirect Expenses) or

=B4 – (B5 + B6 + B14)i. Use the fill handle to copy the range B8:B15 to the range C8:I15.j. Select the range J8:J15 and click the AutoSum button on the Standard toolbar.

8. Add a bottom border to the range B13:J13. Assign the Currency style with two decimal places and shownegative numbers in parentheses to the following ranges: B4:J4; B8:J8; and B14:J15. Assign the Commastyle with two decimal places and show negative numbers in parentheses to the following ranges: B5:J6 andB9:J13.

9. Change the font in cell A1 to 36-point Arial Black (or a similar font). Change the font in cell A2 to 18-point Arial Black (or a similar font). Change the font in cell A17 to 14-point italic underlined font.

10. Use the background color red, the font color white, and a drop shadow (Shadow Style 14) for the rangesA1:J2; A7; A15:J15; and A17:B23 as shown in Figure 3-87.

11. Rename the Sheet1 sheet, Indirect Expenses, and color its tab red. Unfreeze the worksheet.12. Enter your name, course, laboratory assignment (Lab 3-2), date, and instructor name in the range A27:A31.

Save the workbook using the file name, Lab 3-2 Casa Grande Profit Center Analysis of Indirect Expenses.13. Use the Page Setup command on the File menu to change the orientation to landscape. Preview and print

the worksheet. Preview and print the formulas version (CTRL+`) of the worksheet in landscape orientationusing the Fit to option button in the Page Setup dialog box. After printing the formulas version, reset theprint scaling to 100%. Press CTRL+` to show the values version of the worksheet. Save the workbook again.

14. Divide the window into four panes and show the four corners of the worksheet. Remove the four panes.15. Add white space to the worksheet by inserting blank rows between rows 6 and 7 and 15 and 16. Move the

range A19:B25 down three rows. Print the worksheet and then close the workbook without saving changes.

Instructions Part 2: Open the workbook created in Part 1. Draw a 3-D Pie chart (Figure 3-88 on the nextpage) that shows the contribution of each category of indirect expense to the total indirect expenses. That is,chart the nonadjacent ranges A8:A13 (category names) and J8:J13 (data series). Show labels that include category names and percentages. Do not show the legend. Format the 3-D Pie chart as shown in Figure 3-88.Rename the chart sheet 3-D Pie Chart and color the tab blue. Move the chart tab to the right of the worksheettab. Save the workbook using the file name Lab 3-2 Casa Grande Profit Center Analysis of Indirect Expenses.Preview and print both sheets.

(continued)

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Instructions Part 3: Using the numbers in Table 3-12, analyze the effect of changing the planned indirect expenses inthe range B18:B23 on the net incomes for each profit center.Print the worksheet for each case. You should end with the fol-lowing totals in cell J15: Case 1 = $538,570.00 and Case 2 =$654,020.00. When you have finished, close the workbookwithout saving the latest changes.

3 Modifying the Weekly Payroll Worksheet

Problem: Your supervisor in the Payroll department has asked you to modify the payroll workbook developedin Exercise 1 of the Project 2 In the Lab section on page EX 132, so that it appears as shown in Figure 3-89. Ifyou did not complete Exercise 1 in Project 2, ask your instructor for a copy of Lab 2-1 Illiana Custom HomesWeekly Payroll Report workbook or complete that exercise before you begin this one.

Case 1 Case 2

Administrative 110000 66250

Depreciation 96500 63000

Energy 48750 31500

Insurance 32450 22500

Maintenance 38000 28000

Marketing 61000 60000

Table 3-12 Casa Grande Resort & Spa What-If Data

Profit Center Analysis of Indirect Expense Allocations (continued)

FIGURE 3-88

EX 218 • Excel Pro ject 3Microsoft Office

Excel 2003

FIGURE 3-89

The major modifications requested by your supervisor include: (1) reformatting the worksheet; (2) addingcomputations of time-and-a-half for hours worked greater than 40; (3) removing the conditional formattingassigned to the range B4:B9; (4) adding calculations to charge no federal tax in certain situations; (5) addingSocial Security and Medicare deductions; (6) adding and deleting employees; and (7) changing employee information.

Instructions Part 1: Open the workbook, Lab 2-1 Illiana Custom Homes Weekly Payroll Report, created inProject 2 (Figure 2-88 on page EX 132). Perform the following tasks.

1. Delete rows 11 through 13. Change all the row heights back to the default height (12.75). Select the entiresheet using the Select All button and then clear all remaining formats using the Formats command on theClear submenu of the Edit menu. Bold the entire worksheet. Enhance the worksheet title as shown in Figure 3-89.

2. Insert a new column between columns D and E. Enter the new column E title YTD Soc. Sec. in cell E3.Insert two new columns between columns E and F. Enter the new column G title Soc. Sec. in cell G3. Enter the new column H title Medicare in cell H3.

3. Change the column widths as follows: A = 25.00; B = 9.43; C = 7.00; D = 6.00; E = 13.14; F through K = 9.71; and L = 8.43. Change the row heights as follows: row 1 = 41.25; rows 2 and 3 = 18.00.

4. Assign the NOW function to cell B2 and format it to the 3/14/2001 style.5. Delete row 7 (Rifken, Felix). Change

Hadef Kaden’s (row 5) rate of pay to $8.00 and number of dependents to 10.

6. Freeze column A and rows 1 through 3. In column E, enter the YTD Soc. Sec. values listed in Table 3-13.

Employee YTD Soc. Sec.

Jedi, Hubert 4,974.00

Kaden, Hadef 5,340.20

Pancer, Dion 4,254.00

Sanchez, Maria 5,393.00

Scarff, Heidi 4,825.50

Table 3-13 Illiana Custom Homes EmployeeYTD Social Security Values

(continued)

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Modifying the Weekly Payroll Worksheet (continued)

7. Insert two new rows immediately above the Totals row. Add the new employee data as listed in Table 3-14.

8. Assign a Comma style with two decimal places to the ranges B4:C11 and E4:K11. Assign a Percent style and two decimal places to the range L4:L11. Center the rangeD4:D10.

9. As shown in Figure 3-89 on the previous page, enter and format the Social Security and Medicare tax infor-mation in the range A13:B15. Use format symbols where applicable.

10. Change the formulas to determine the gross pay in column F and the federal tax in column I as follows:a. In cell F4, enter an IF function that applies the following logic and then copy it to the range F5:F10.

If Hours <= 40, then Gross Pay = Rate * Hours, otherwise Gross Pay = Rate * Hours + 0.5 * Rate *(Hours - 40)

b. In cell I4, enter the IF function that applies the following logic and then copy it to the range I5:I10.

If (Gross Pay – Dependents * 38.46) > 0, then Federal Tax = 20% * (Gross Pay – Dependents * 38.46), otherwise Federal Tax = 0

11. An employee pays Social Security tax only if his or her YTD Soc. Sec. in column E is less than the Maximum Social Security in cell B15. Use the following logic to determine the Social Security tax forHubert Jedi in cell G4 and then copy it to the range G5:G10.

If Social Security Tax * Gross Pay + YTD Soc. Sec. > Maximum Social Security, then Maximum SocialSecurity – YTD Soc. Sec., otherwise Social Security Tax * Gross Pay

Use absolute cell references for the Social Security Tax and Maximum Social Security values. 12. In cell H4, enter the following formula and then copy it to the range H5:H10:

Medicare = Medicare Tax * Gross Pay

Use absolute cell references for the Medicare Tax values. 13. In cell K4, enter the following formula and copy it to the range K5:K10:

Gross Pay – (Soc. Sec. + Medicare + Fed. Tax + State Tax)

14. In cell L4, enter the following formula and copy it to the range L5:L11:(Soc. Sec. + Medicare + Fed. Tax + State Tax) / Gross Pay

15. Determine any new totals as shown in row 11 of Figure 3-89.16. Use alignment, borders, and drop shadows to format the worksheet as shown in Figure 3-89. 17. Enter your name, course, laboratory assignment (Lab 3-3), date, and instructor name in the range A17:A21.18. Save the workbook using the file name Lab 3-3 Illiana Custom Homes Weekly Payroll Report.19. Use the Zoom box on the Standard toolbar to change the view of the worksheet. One by one, select all the

percents in the Zoom list. When you are done, return the worksheet to 100% magnification.20. Use the Page Setup command on the File menu to change the orientation to landscape. Preview the work-

sheet. If number signs appear in place of numbers in any columns, adjust the column widths. Print theworksheet. Save the worksheet using the same file name.

21. Preview and print the formulas version (CTRL+`) in landscape orientation using the Fit to option button inthe Page Setup dialog box. Close the worksheet without saving the latest changes.

Employee Rate Hours Dep. YTD Soc. Sec.

Ho, Lee 25.50 6.00 7 250.00

Mil, Tyrone 31.50 32.50 5 5,394.00

Table 3-14 New Employee Data

EX 220 • Excel Pro ject 3Microsoft Office

Excel 2003

Instructions Part 2: Open Lab 3-3 Illiana Custom Homes Weekly Payroll Report. Using the numbers in Table 3-15, analyze the effect of changing the Social Securitytax in cell B13 and the Medicare tax in cell B14. Print theworksheet for each case. The first case should result in atotal Social Security tax in cell G11 of $240.07. The secondcase should result in a total Social Security tax of $319.76.Close the workbook and do not save any changes.

Instructions Part 3: Hand in your handwritten results for this exercise to your instructor. Open Lab 3-3Illiana Custom Homes Weekly Payroll Report.

1. Select cell F4. Write down the formula that Excel displays in the formula bar. Select the range C4:C10.Point to the border surrounding the range and drag the selection to the range D13:D19. Click cell F4, andwrite down the formula that Excel displays in the formula bar below the one you wrote down earlier. Compare the two formulas. What can you conclude about how Excel responds when you move cellsinvolved in a formula? Click the Undo button on the Standard toolbar.

2. Right-click the range C4:C10 and then click Delete on the shortcut menu. When Excel displays the Deletedialog box, click Shift cells left and then click the OK button. What does Excel display in cell F4? Use theType a question for help box on the menu bar to find a definition of the result in cell F4. Write down thedefinition. Click the Undo button on the Standard toolbar.

3. Right-click the range C4:C10 and then click Insert on the shortcut menu. When Excel displays the Insertdialog box, click Shift cells right and then click the OK button. What does Excel display in the formula barwhen you click cell F4? What does Excel display in the formula bar when you click cell G4? What can you conclude about how Excel responds when you insert cells next to cells involved in a formula? Close theworkbook without saving the changes.

Social Security Medicare Case Tax Tax

1 7.50% 2.45%

2 10.00% 3.00%

Table 3-15 Illiana Custom Homes SocialSecurity and Medicare Tax Cases

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