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Introduction
Most work done by business analysts can be categorized as either reporting (providing required data) or
analysis (building models to help your organization make the right decisions). In today's world, most business
reporting and modeling is done using Microsoft Excel. Completing this course should increase your
ability to use Excel to create reports and/or develop powerful business models. Even if you have never
used Excel before, we will teach you how to use Excel's powerful functions and chart capabilities to solve
a myriad of business problems.
If you are a student, then during your MBA program you will have to build many models to analyze
cases or build spreadsheet models in courses such as finance, marketing, accounting, operations and
management science. We will give you the spreadsheet knowledge needed to tackle the many analytical
questions that arise during your course work.
If you are a business analyst, this course will introduce you to many new concepts and tools that will
help you more quickly and accurately summarize business data. The course will also teach you how to
develop spreadsheet models that will help your organization make better decisions.
The Company
Le Napoleon is a bakery specializing in French pastries, now owned by a partnership that includes its
two ex-pat French pastry chefs, Michel Toure, whose family moved to Strasbourg from Mali when he
was a small child, and Anne-Sophie Le Nguyen, who grew up in the Cognac region.
The two met each other not long after moving to the U.S. and found that not only did they have a shared
dream of business ownership but that each had strengths to offset the other's weaknesses. Both have
exceedingly refined tastes, but their success lies more in Michel's way with obscure ingredients and
techniques and Anne-Sophie's ambition and exceptional understanding of the customer.
Le Napoleon got its start in a business incubator, and at first, the bakery had just a small stand at the
weekly farmer's market. Soon, though, satisfied customers began to place special orders. When Michel
and Anne-Sophia had to turn down their third wedding cake request, they decided to sit down and work
out a plan to move out of the business incubator and into their own, dedicated location. The business is
now thriving.
In this course, we will use operations at Le Napoleon to illustrate some of the problems that businesses
both large and small must faceand Excel to illustrate solutions to those problems.
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etc.). In the Charts section, we show you how to use Excel to create informative charts. In the next
section, you will learn how to import word files and Internet data into the Excel environment.
The Art of Spreadsheet Modeling section contains an extensive explanation of how to build spreadsheet
models to solve a business problem. For example, should a bakery open a new outlet? How should we plan to
save for retirement? In this section, we cover many exciting modeling tools such as Auditing, spinner
controls, Goal Seek, Data Validation and Data Tables. The Using Excel Solver section covers the Excel Solver
tool which is used to find the optimal solution to a problem. The Three-Dimensional Formulas section
explains how 3D formulas and Excel's Table feature can make you much more efficient when you
develop spreadsheet models. Finally, the Monte Carlo Simulation closes the course by introducing you
to a really efficient model building tool. In that section, you will learn how Monte Carlo simulation can
be used to model the effect of uncertainty on business decisions.
The spreadsheet is the canvas for the business analyst. This course gives you the "artistic skills" needed
to develop state of the art spreadsheet models for solving business problems.
Opening workbooks
Throughout this course, we will continue to present ways to increase not only your proficiency in but
also your efficiency with Excel.
Opening a workbook
To open a workbook, use any of the following techniques.
Double-click its icon in Windows Explorer. This will work as long as Windows knows that the
file can be opened in Excel.
If Excel is running, hit Ctrl-O or the Office Button (the round button in the upper-left-hand
corner of the Excel window) and browse for the file. You can use the "Files of type" drop-down
box to view a number of different file types.
If Excel is running and the icon representing your file is the generic Windows icon, but you
know that Excel can read it, it might be easiest to drag the icon into the Excel window. You can
use this method for any file type that Excel can open.
Open the Excel Environment.xlsx file by any of the above methods. This file contains data from
questionnaires completed by customers of Le Napoleon. Leave this file open, as we will continue to
work with it.
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Worksheets
Each workbook file contains one or more tabbed worksheets. You can easily set the number of
worksheets that you want new workbooks to contain, rename sheets, and move and delete worksheets.
Note that spaces, dashes, and certain other special characters are legal in sheet names, while other
characters, such as \ / ? are not. Also, although we have opted to use spaces in the sheet names in our
example file, know that this can complicate more advanced uses of the program.
In the Excel Environment.xlsx file, rename the bakery1 worksheet to bakery mon-thurs, bakery2 to bakery frisun; mall1 to mall mon-thurs and mall2 to mall fri-sun.
Move sheets to be in this order: bakery mon-thurs, bakery fri-sun, mall mon-thurs, mall fri-sun.
Rename Sheet1 to key. Move this sheet to the beginning of the workbook.
You can also move or copy worksheets into another workbook. This is handy if you are working on a
team and need to bring people's individual work into a single file.
Insert a new sheet and call it summary. Move it to the beginning of the workbook, before the key
worksheet. We will leave this sheet blank for now.
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Printing a Worksheet
In a later chapter, we will discuss print areas and page setup.
View the key worksheet in Print Preview. Note that before printing this worksheet, we will probably
want to make some adjustments. Don't click Print; instead click the Close Print Preview button on the
Print Preview tab.
Selecting Ranges
There are a number of ways to select ranges of cells. In this section, we will explore the selection of
contiguous cells using the selection pointer as well as the Ctrl and Shift keys. We will also discuss a
means of easily selecting ranges within a large dataset.
Selection Pointer
On the bakery mon-thurs worksheet, select the range F2:F11. Check the status bar for statistics on this
range.
While we are on the topic of statistical functions, it is worth pointing out that zero values are included in
averages and other statistics, whereas blank cells are not.
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Change your status bar settings so that the five statistics mentioned above average, count, min, max,
and sum are displayed in the status bar when data is selected.
Practice with Ctrl, Shift, and Ctrl-Shift. On the key worksheet, select cell A2. Hold down just the
Ctrl key and hit the left arrow key. The selected cell should now be R2, the last cell in the
contiguous range A2:R2.
Select cell A2 again. This time, hold down just the Shift key and hit the left arrow key. Keeping
the Shift key held down, hit the left arrow key a few more times. You should see that Excel
advances one cell at a time, adding cells to the selection.
Select cell A2 a final time. Hold down both Ctrl and Shift, and hit the left arrow key. Excel both
"moves" all the way to R2 (Ctrl key behavior) and retains the selection of the intermediate cells
(Shift key behavior).
In cases where there are blanks in the data, it is helpful to work with a split screen, as shown in the next
topic.
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Once you have the selection that you want, hit F8 a second time to exit Extend Selection mode. Your
selection will remain active unless you select another cell. If you want to select a second range, use the
trick described next, Shift-F8.
Hitting Shift+F8 puts Excel in Add to Selection mode. In other words, you can
Use F8 to select a range (remembering to hit F8 to exit Extend Selection mode when you are
ready).
Use Shift+F8 to select a second range (which can also then be done with the F8/Extend Selection
technique).
In Name Box
The Name Box, found just above the header for column A, shows the name of the currently selected cell
or range (more on named ranges in a later chapter).
By typing a cell address or range name in the Name Box and hitting Enter, you can select (and jump to)
cells or named ranges.
On the bakery mon-thurs worksheet, type L97, and hit Enter. Excel should take you to that cell. Now
return to the Name Box and click its drop-down arrow. You should see questions as an option; this is
because we have assigned the name questions to a range. Choose questions from the drop-down list to
jump to this range.
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Filling Series
For commonly used series and entries that Excel can populate to be part of a series (e.g., Bakery Item 1,
Bakery Item 2), you can use the Autofill handle to fill in as much of the series as you need. The Autofill
handle appears at the bottom right of a selected cell or range of cells; it appears to be a small square
superimposed on that corner of the black border around the selected cell.
When the pointer hovers over the Autofill handle, it changes shape to resemble a cross.
Like dates, times can be autofilled, with Excel augmenting the value in each cell by one hour. Unlike
with dates, however, the Auto Fill Options will not allow you to change the increment to fifteen minutes
or a half-hour.
This same technique, specifying the first two elements of the series before autofilling, could be used if
you wanted to create a series like {1, 2, 3 . . .} or {5, 10, 15 . . .}.
Another way to create a series like {1, 2, 3 . . .} is to use the Fill Series command. This is especially useful
if you often find yourself overshooting the mark when you drag with the mouse.
In addition, you can define your own custom fill series. For example, Le Napoleon might want to define
a series based on a list of specialty pastries, hourly employees' names, or names of restaurants that
procure dessert offerings from the bakery. Once the series is defined, only one element from the series
would need to be entered manually; the rest could be autofilled.
On the bakery mon-thurs worksheet, edit Question_1 to read Question 1. Fill to complete the series
through Question 16.
Select the bakery fri-sun worksheet. In column A, below the Respondent label, create values from 1 to
100 via autofill.
Do the same for the mall mon-thurs worksheet (again using numbers from 1 to 100), but this time,
double-click rather than dragging the autofill handle. Because there is a block of contiguous data
in the adjacent column, Excel fills the series to the end of that block.
For the mall fri-sun worksheet, use Fill Series to create numbers from 1 to 100.
Download the file Working with Data_products.xlsx. Using the data on Sheet1, create a custom
fill series. Test your series to see that it works. Then, if you wish, feel free to delete the series (via
Excel Options).
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Borders and patterns can also be set in the Format Cells dialog box. We will apply borders and patterns
to the range on the summary worksheet that contains the averages.
Note that borders (but not patterns) can also be applied using the buttons on the Home tab, or the menu
that appears when you right-click a selection.
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Finally, we can create custom date formats by choosing the Custom category and entering the date
format desired. We'll format the date 8/1/2008 so that it reads correctly.
Many other possibilities exist for custom formatting; this is a good option to keep in the back of your
mind!
Conditional Formatting
There are many instances in which we might want only certain cells to display a special format. Le
Napoleon, for example, might want to highlight averages on the summary worksheet that management
considers subpar. While we could identify and format those averages manually, conditional formatting
is easier. It is also more powerfulsince it is dynamic, we will not have to redo the format if we obtain
new data that drives some averages up and out of the range that we wanted highlighted.
On the summary worksheet, we will format the averages for questions (6)-(11) if the value in the cell is
below 3.
Now we can easily see that parking might be a good problem to address at the bakery location, whereas
at the mall location (where Le Napoleon sells goods sent over from the bakery), the variety of baked
goods appears to be an issue.
Also on the summary worksheet, we could use data bars to make it easier to compare at a glance the four
averages for question (5) "To the nearest dollar, how much was your order?"
We'll explore a few more examples of conditional formatting in the Increasing Spreadsheet
Readability_orders.xlsx workbook. This workbook contains brief details for a number of special orders
that the clerks at Le Napoleon have taken; we could use this to gauge the general size of an order,
whether it might involve ingredients or components not usually part of the pastry kitchen, and when it
needs to be delivered or available for pick-up. We can assume that adequate details for the creation of
each order are stored where the chefs can access them as needed.
First, let's format the dates for orders needed this month with a red style, and the dates for those needed
next month with a yellow style.
As usual, select all of the cells that the formatting should apply to (cells B2:B35 on the orders worksheet
in the Increasing Spreadsheet Readability_orders workbook). Then, from the Conditional Formatting
menu, select Highlight Cells Rules, then A Date Occurring...
In the menu box that appears, choose This Month, and Light Red Fill with Dark Red Text.
Repeat this process, choosing Next Month and Yellow Fill with Dark Yellow Text.
Management might want to see at a glance which order totals are above the average. Conditional
formatting has a number of preprogrammed options that compare values in individual cells to the entire
range of cells chosen for formatting.
To format all of the order totals that are above average, first select cells E2:E35. From the Conditional
Formatting menu, select Above Average (note the other options in this list before doing so!).
In the menu box that appears, choose a predefined style, or define your own custom style. We have
chosen Green Fill with Dark Green Text:
The time of day that an order is needed can determine whether kitchen staff needs to prepare part of the
order the previous day, or come in extra-early that day, or perhaps stay late that evening. We would like
to be able to see at a glance what time an order is due, without risking the kind of mistake that can occur
by misreading AM for PM or vice versa.
The preprogrammed color scales in the conditional formatting option provide an easy solution. Select
cells C2:C35. Then, from the Conditional Formatting menu, choose Color Scales, and select a color scale.
(The Blue - Yellow - Red and the Red - Yellow options both provide reasonably intuitive formatting for
the problem at hand.)
To the right is what the data should look like if you chose the Blue Yellow Red option.
Finally, let's revisit the formatting that we applied to the order totals. In addition to having all aboveaverage order totals shaded (which we have already done), let's say the kitchen wanted to see at a glance
how critical each order is in terms of revenue.
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A color scale like the one that we applied in the previous example would provide one quick solution, but
it would compete visually with the shading already present on above-average values in this range. An
icon set is a better way of keeping the existing shading and marking a new distinction.
Select cells E2:E35 and, from the Conditional Formatting menu, choose Icon Sets. The Red to Black style
fits nicely with what we are trying to accomplish heredistinguish these data values in another way
without making the result too visually confusing.
The order total data should now look like what you see on the right here.
Increasing Readability Solution
Color scales, icons, and data bars have default settings that determine what values will be given what
formats. You can change these settings, perhaps choosing a different threshold between a red and a light
red icon, or associating the short end of a data bar with a static value rather than whatever happens to be
the lowest number in the range of cells (handy if your dataset contains negative values).
These settings are configured in the New Formatting Rule or Edit Formatting Rule dialog boxes, which
you can access as you are first applying a format, or after the fact, via the Conditional Formatting menu.
If you are setting up a new rule that you want to configure more closely, choose the More Rules option
(after selecting the general rule type; e.g., Icon Sets).
If you want to go back and configure an existing rule, select the relevant range of cells, and from the
Conditional Formatting menu, choose Manage Rules.
In the dialog box that appears, select the rule to be customized and click Edit Rule. This will open the
Edit Formatting Rule dialog box, where you can make adjustments to the behavior of the rule.
Conditional formatting provides for much more powerful options than those that we have just seen.
We'll revisit the topic of conditional formatting in a later chapter.
Formatting and Other Options with Paste Special
Sometimes we format a cell or range of cells with the font colors, borders, patterns, and number formats
we want, only to find that there are other cells that need to be formatted in a similar manner. The Format
Painter, found on the Home tab, will allow us to copy all of the formats from a cell and then paint other
cells with these formats. What if we want to transfer just some formats from one cell to another,
however?
Excel has special options that you can choose from when completing a copy-paste operation. The Paste
Special dialog box (accessible via the Paste drop-down list on the Home tab) is shown below.
Setting Up a Worksheet for Printing
Now that the summary worksheet contains the formatting we want, we can set it up to display the way
we want on the printed page.
On the Page Layout tab, Page Setup contains options for selecting the paper size, orienting data,
changing margins, and so on.
Now click the Office Button, and from the list of Print options, select Print Preview. By default, Excel will
send the entire contents of a worksheet to the printer. Since cells J14 and J15 contain the name and phone
number of the group that designed Le Napoleon's questionnaire, Excel will want to print those cells.
However, to do this and still use only one pageas we requested when we configured the Page Setup
optionswill require shrinking everything to the point that our averages might become difficult to read.
Instead, let's have Excel print only those cells we want by marking a range on the worksheet for printing.
Among other things, the Sheet tab in the Page Setup dialog also allows you to control whether a
worksheet's gridlines will print, to repeat the contents of a row or column on each sheet (useful for
printing headers like our respondent's index numbers, or our question numbers on every page of a
multi-page print job), and to print Excel's column headings (A, B, C, etc.) or row labels on each page of a
multi-page print job.
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Excel Formulas
People use spreadsheets to compute quantities of interest. In any cell of a spreadsheet we are free to
enter a formula to compute a quantity of interest. For example, the management of Le Napoleon might
want to compute the following quantities:
The cost of purchasing sugar, butter, and flour from each supplier as well as the total amount we
owe each supplier
The annual profit from the sale of Sacher Tortes, using various price and unit cost scenarios.
In this unit we will use Excel formulas to efficiently and easily compute these quantities of interest, We
will see that in order to efficiently use formulas we must have an understanding of the spreadsheet Copy
command. Our work in this unit will use the file Excel Formulas.xlsx, so please download this workbook
now.
In this chapter we will discuss following features
Copying Formulas
Absolute Addressing
Summation Icon
Do it yourself
Copying Formulas
Work book:
Excel Formulas
In worksheet Wages of the file Excel Formulas.xlsx we compute the weekly wage for our 8 employees
(their names are in cells B4:B11). For each employee we are given (in cells C4:C11) the hours each
employee worked this week, and in cells D4:D11 we are given each employee's hourly wage.
CAPTION
For example, Tricia Lopez worked 49 hours and is paid $10 per hour. We know that for this week Tricia
will be paid 49*10 =$490. To compute Tricia's weekly salary in cell E4 we simply move the cursor to cell
E4 and type =C4*D4 and hit enter. We then see Tricia's weekly salary (490) show up in cell E4. All Excel
formulas must begin with an equals (=) sign. The * is the mathematical symbol for multiplication.
Now we could compute Will Wong's salary in E5 with the formula =C5*D5 and continue onward and
enter a formula to compute each employee's salary. Of course, if we have hundreds or thousands of
employees, this would be really tedious. Fortunately, Excel's ability to let us "copy" formulas eliminates
this problem. What we really want to do in each of cells E4:E11 is to multiply the two numbers to the left
of column E in the same row.
To accomplish this goal we simply "copy" our formula in E4 to the cell range E5:E11. Then in cells E5:E11
our copied formula will try to do in cells E5:E11 exactly what it did in cell E4 (multiply the numbers in
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the same row in columns C and D). Basically, when you copy a formula that has no $ signs attached to
cell addresses (more on $ signs later, but do not worry about them now!), then if you copy a formula
down a row the row numbering the formula is increased by 1, and if you copy a formula across and to
the right one row the column number is increased by 1.
CAPTION
To copy our formula from cell E4 to E5:E11 simply move the cursor to the lower right-hand corner of cell
E4. You will see a little "cross." Now drag the cross (while holding down the left mouse button) to cell
E11. You will now see that each employee's weekly salary has been calculated. To copy the formula
without affecting the existing formats, click the Auto Fill Options button and choose Fill Without
Formatting. Move the cursor to cell E6, for example, and you will see the formula =C6*D6 is in cell E6.
Copying our formula allows us to easily "do the same thing" multiple times in our spreadsheet.
Try to use the Autocomplete feature to compute the average amount paid this week to our employees.
Hint: AVERAGE is the Excel function for computing an average.
CAPTION
In cell E12 we computed our total weekly payroll by entering the formula =SUM(E4:E11) in cell E12.
Note that as we type =SU we see a list of Excel functions show up. If we double click on the SUM
function or move to the SUM function and hit the tab key, then Excel enters the letter M and the ( needed
for our formula. This neat time saver is called the Autocomplete option.
If we type in a complex formula, then we can easily type in the incorrect cell reference. Most users of
Excel prefer to enter formulas by "pointing" to the cells referenced in the formula.
Use pointing to reenter the formula used to compute our total weekly payroll.
CAPTION
To illustrate how pointing works, let's use pointing to reenter our formula in cell E4 that computes Tricia
Lopez's weekly salary. Move your cursor to cell E4 and type = but now simply click on cell C4. Then type
an * and then move to cell D4. Hit enter and you are done.
CAPTION
We now show how to copy a formula without using the mouse. Let's again copy the formula for Tricia's
salary from E4 to E5:E11 to compute each employee's weekly salary. Simply move the cursor to cell E4
and select Control+C. You will see dotted lines around cell E4 (we call those moving ants). Next select
the range where you want the formula copied (E5:E11). Select Control+V and each person's weekly
salary will be computed. To copy the formula without affecting the existing formats, click the Auto Fill
Options button and choose Match Destination Formatting.
Perhaps the easiest way to copy a formula is by using the "Double Click" method. Simply move the
cursor to cell E4 and get the cross in the lower right-hand corner. Now double-click the left mouse button
and our formula in cell E4 will copy down to match the number of rows in the column immediately to
the left (column D). When copying a formula down a large number of rows, this is the slickest, most
efficient method.
We have shown how to copy a formula by dragging the formula down a column. You may also copy a
formula by dragging it across a row.
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CAPTION
We begin by computing the cost of the sugar purchased from supplier 1 by entering in cell J9 the formula
=E5*E14. If we copy this formula to the range J9:L14 we will have computed the cost of buying each
commodity from each supplier. To copy our formula from J9 to J9:L14, move the cursor to J9 and select
Control + C. You will see moving ants in cell J9 indicating that we can copy this formula. Now use the
mouse or keyboard to select the cell range J9:L14 and select Control+V. Our formula is now copied and
we have computed the cost of buying each commodity from each supplier.
ABSOLUTE ADDRESSING
CAPTION
To compute the cost of the Praline Torte in cell E15 we enter the following formula in
cell E15.
CAPTION
As we enter the formula into E15 we note that PI() equals the constant =3.1416. Note that as we type in
PI we used Auto complete to complete the function PI(). The portion of the formula ($D$10/2)^2
computes the radius (diameter/2) and squares it. The ^ symbol (located on top of the number 6 on the
keyboard) indicates that what is in () is raised to the power after the ^. The / indicates division. Notice
that we did not type in the $ signs. We hit F4 to put in the $ signs. Repeatedly hitting the F4 key cycles
through $D$10, D$10, $D10, D10. After hitting the enter key we copy the formula in E15 to E16:E17. This
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will compute the cost of the other tortes. First obtain the cross in the lower right-hand corner of cell E15.
Then we dragged the cross down to E17. We have now computed the cost of each torte!
The astute student is probably wondering why we used parentheses in our cell E15 formula, instead of
typing the formula as: =PI()*($D$10/2)^2*$D$11*D15.
Operation(s) contained in parentheses are carried out first followed by operations involving exponents.
Then division or multiplication operations are given equal precedence. Operations involving
multiplication and division are given equal precedence and are then carried out from left to right.
Finally, operations involving addition and subtraction are given equal precedence and are then carried
out from left to right.
Without the parentheses, Excel would square 2 (obtaining 4) and then compute $D$10/4 which equals 2.
We want, of course, the part of our formula involving D10/2 to yield 16 and not 2. Inserting ( ) around
$D$10/2 ensures that we first divide the contents of cell D10 by 2 and then square the result (this yields
42/2 = 8, as desired).
Summation Icon
CAPTION
The Summation icon allows us to quickly sum the contents of a cell range. The Summation icon is located
in the Editing section of the Home tab on the ribbon.
We want to create summation formulas in the range H23:H28 and E29:H29. Select the range H23:H28
and hold down the control key. Now select the range E29:H29. Next click on the summation icon and
you have computed the total owed by each supplier and the total cost of each commodity. Note that
holding down the control key enables us to select a noncontiguous range of cells.
CAPTION
If you want to edit or correct a formula simply move your cursor to the cell and select the F2 key or
double-click on the cell. You are now free to edit or change the desired formula. Simply hit enter when
you are done changing the formula.
CAPTION
Sometimes we want our cells to display the cell formula, rather than the value computed by the cell
formula.
First select the Office button, followed by Excel Options, Advanced, and under Display Options
Available for this worksheet check "Show formulas in cells instead of their calculated results". Your
formulas will now show in all worksheet cells. Unchecking the box causes the results of the formulas to
be shown.
Another way to show or hide formulas is Ctrl + the ~ on the keyboard. This functions as a toggle switch
turning the display of formulas on and off.
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Do It Yourself Exercise
Suppose our annual demand for Sacher Torte equals 7000 minus 160 times (price of Sacher Torte).
Producing Sacher Tortes incurs an annual fixed cost of $5000. Construct a table which shows how our
annual profit from Sacher Tortes varies as the cost of producing a Sacher Torte varies from $17.00 to
$24.00 and the price of a Sacher Torte varies between $25 and $35.
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