Question

1. On the sheet of Goal Seek, find the way to achieve your 2017 profit goals.
   1. Go back to Income Statement sheet. It must be completed by now. Copy the gray area (A3:G23). Go to the sheet of Goal Seek, and paste it at the cell A3.
   2. At the blank Rows 1 & 2, merge some cells and add a title 2017 Sales Estimates.
   3. The cell J3 should show a label Price Increasing Rate:, and J4 should show 5%. If they are not there because of your copying and pasting, please add them to your sheet at proper locations.
   4. Edit your data sheet and include 5% increase on Unit Price of all products. Make sure you use formula with reference to J4, where it shows the increasing rate of prices.
   5. Use the Goal Seek tool and see if we want to achieve a $125,000 net profit, what is the increasing rate of price we should apply in 2017?
2. The goal Seek is:

   	Price Increasing Rate:
   	10%

Answer 1

solution :

given that Rundle Freight Company owns a truck that cost $33,000.

also given that Currently, the truck’s book value is $27,000, and its expected remaining useful life is five years

mentioned in gi ven indormation that

Rundle has the opportunity to purchase for $28,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $7,000 per year more than fuel cost for the new truck.

some other given information The old truck is paid for but, in spite of being in good condition, can be sold for only $16,000.

Calculating the total relevant costs:

	retaining truck	replacing truck
cost of the new truck	$-	$28000
additional fuel cost (5*7000)	$35000	$-
oppurtunity cost	$16000	$-
total cost	$51000	$28000

final decision of retaining old truck :

the purchase cost of ol;d truck and book value are irrelevant

they are sunk cost

therefore they should not be considered

the comparision cost of replacing and retaining truck are given above

from the above table

the company should replace the old truck as it would cost $28000 in replacement as against the cost of reraining truck of $51000