Kerstin Nilsson is the business manager at CyberBugs, a toy company that sells robotic toys. She wants to determine the optimal price point for their Basic CyberBugs kit to maximize profits. Using a price elasticity value of 1.6 determined from her market research, Kerstin asks the assistant to calculate the price that results in the highest net income for the Basic CyberBugs kit. The assistant is provided a workbook called Optimal to perform the calculations and determine the optimal price point.

1. Buy here:
http://homeworknumber.one/products.php?product=Cas
e-Problem%3A-Optimal.xlsx
Data File needed for Onto Case Problem: OptImal.xlsx
CyberBugs Kerstin Nilsson Is the business manager at CyberBugs, a toy company in
Columbia, Missouri, that sells small robotic toys that mimic the appearance and actions of
insects. Ketstin wants to create an income statement for the Basic CyberBugs kit She
wants to find the optimal price for selling the kit From her market research, Kerstin
projects that the company can sell 12,000 16..521 per kit.
Kerstin wants to know if the company's profits would increase if the sales price increased.
Obviously, the higher the sales price, the higher the profit per kit; but the company Might
also sell fewer kits at the higher price, resulting in an overall loss of profit. The optimal
price point occurs when the company can sell the most units possible at the highest price
without hurting sales. To calculate the optimal price point, you need M take into account
the price elasticity of demand, which measures the response of sales volume to changes
in price. From her research, Kerstin has determined a price elasticity value of 1.6 for
CyberBugs products, which basically means that a 10 percent increase in prices will
cause a 16 percent decline in sales. Taking this information into account, Ketstin asks you
to determine the price that results in the highest net income. Complete the following,
1. Open the Optimal workbook located in the Excel10?Case3 folder included with your
Data Ales, and then save the workbook as Optimal Price Point in the location specified by
your instructor.
2. In the Documentation worksheet enter your name and the current date.

2. 3. In the Income Statement worksheet, in cell C10, enter 21 as the price per CyberBug
Kerstin has already inserted the basic information about the Price Elasticity of Demand.
Based on her calculations in cell C11, the company can sell 12,000 kits if the price per kit
is $21.
4. In cell C12, calculate the projected revenue by multiplying the price per kit by the
number of kits produced.
5. The company plans to manufacture about 3 percent more kits than it sells. In cell C15,
calculate the kits produced by multiplying the value in C11 by 1.3.
6. In cell C16, enter a material cost per kit of $7.20, and in cell C17, calculate the total
material coast by multiplying the material per kit by the number of kits produced.