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Koribbean Oasis has been successfully selling coffee beans produced in Saint Lucia all over the world via its online store. Given the recent Covid-19 outbreaks in the island, Dawn, the CEO, is trying to better prepare for the upcoming year and has approached you to prepare a pro-forma income statement.

You just mentioned to Dawn that you could run a Monte Carlo simulation on different input variables and provide can provide her with the results of 10,000 simulations. The following is a list of key input variables that you compiled based on an interview with Dawn:

Sales Volume: 1,500,0000 bags

Historical sales data from 2010 to 2020 is provided in an Excel file. Most likely volume would be the one from the forecast model. Min is the low end assuming 99% confidence interval and Max is the upper limit under 95% confidence interval.

Sales Price: US$15 or $20 (uniformly distributed)

Bank fees: 3.5% of gross sales

Shipping costs: $3/bag

Local employee costs:

Junior Staff US$20,000

Manager: US$50,000

The company hires 2 junior staff and one manager. Also, Dawn takes 30% of profits as her yearly remuneration.

Local Income Tax:

Office rent: US$3,000/month

Office Expense: 0.5% of sales

Approximately 3% to 5% of sales are returned and the company policy is to refund 100% of sales price. The return postage is also covered by the company and the probability of a return at 3% is 70% and at 5% it's 30%.

Cost of sales is on average US$5/bag with a standard deviation of $1.2/bag.

Dawn is thinking about buying a new house next year, she is very interested in finding out how much she can take home as her yearly remuneration as soon as the books are closed in January 2022.

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