DUE IN 24 HOURS!!!
Overview
The next step in planning for your new business is to analyze the cost behaviors and systems of your industry and conduct the relevant financial calculations to determine appropriate costing solutions. In this milestone assignment, you will conduct a break-even analysis to determine your target profits and the selling price you plan to use to achieve these profits for each product.
Prompt
Use information from Milestone One and the provided Milestone Two Market Research Data Appendix Word Document to conduct a cost-volume profit analysis. Complete the “Contribution Margin Analysis” and “Break-Even Analysis” tabs in the Project Workbook Spreadsheet that you used for completing the Milestone One assignment.
Specifically, you must address the following rubric criteria:
- Contribution Margin. Determine your contribution margin per unit in the “Contribution Margin Analysis” tab.
- Choose a sales price for each product.
- Calculate the contribution margin for each product based on your sales price and the variable cost for that product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
- Break-Even Analysis. Use cost-volume-profit (CVP) analysis to determine your break-even points for achieving your target profits in the “Break-Even Analysis” tab.
- Determine the break-even points for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
- Determine break-even units for the suggested target profits for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
Instructions
| Southern New Hampshire University | |||||||||||
| College of Continuing Education (COCE) | |||||||||||
| ACC202 – Managerial Accounting | |||||||||||
| MILESTONE 1 (Due in Module 2) | MILESTONE 2 (Due in Module 4) | MILESTONE 3 (Due in Module 5) | |||||||||
| 1. | 1. | 1. | |||||||||
| Name | Choose a price range and calculate: | Create a Cost of Goods Manufactured Schedule | |||||||||
| Location | Grooming | ||||||||||
| Vision | Day Care | ||||||||||
| Mission | Boarding | ||||||||||
| 2. | 2. | 2. | |||||||||
| Identify the following: | Calculate the break-even units | Create an Income Statement | |||||||||
| Direct Materials | Grooming | Revenue will be provided end of week 4 | |||||||||
| Diret Labor | Day Care | ||||||||||
| Manufacturing Overhead | Boarding | ||||||||||
| Period Costs | Calculate the break-even for target profits | ||||||||||
| 3. | Grooming | 3. | |||||||||
| Day Care | |||||||||||
| Calculate the Variable & Fixed Costs for: | Boarding | Calculate for the Grooming line: | |||||||||
| Grooming | Direct Labor Time Variance | ||||||||||
| Day Care | Direct Labor Rate Variance | ||||||||||
| Boarding | Direct Materials Efficiency Variance | ||||||||||
| Direct Materials Price Variance |
ACC202 – MANAGERIAL ACCOUNTING
Company Profile
/xl/drawings/drawing1.xml#CompanyProfile
Variable & Fixed Costs
/xl/drawings/drawing1.xml#VariableFixedCosts
Cost Classification
/xl/drawings/drawing1.xml#CostClassification
Contribution Margin
/xl/drawings/drawing1.xml#ContributionMargin
Break-Even Analysis
/xl/drawings/drawing1.xml#BreakevenAnalysis
COGM Schedule
/xl/drawings/drawing1.xml#COGMSchedule
Income Statement
/xl/drawings/drawing1.xml#COGMSchedule
Variances
/xl/drawings/drawing1.xml#Variances
Instructions Milestone 1
/xl/drawings/drawing1.xml#InstructionsMilestone1
Instructions Milestone 2
/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%202'!InstructionsMilestone2
Instructions Milestone 3
/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%203'!InstructionsMilestone3
Instructions – Milestone 1
| Southern New Hampshire University | ||||
| College of Continuing Education (COCE) | ||||
| ACC202 – Managerial Accounting | ||||
| INSTRUCTIONS FOR MILESTONE 1 (Due Week 2) | ||||
| IMPORTANT NOTE: | ||||
| Make sure to completely review the Rubric for Milestone 1 | ||||
| Use the data from this Milestone and begin working on your final presentation due in Milestone 4 (Week 7) | ||||
| ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs): | ||||
| GENERAL | ||||
| You plan to open a pet services business that will offer dog grooming, day care and boarding | ||||
| COST CLASSIFICATION | ||||
| Accurately classify all of your costs (direct material, direct labor, manufacturing overhead, period costs) | ||||
| Fixed & Variable cost designation is provided | ||||
| VARIABLE & FIXED COSTS | ||||
| Determine your per unit cost per dog for grooming, day care and boarding | ||||
| OPERATIONAL & COST INFORMATION: | ||||
| For simplicity, base all calculations using 30 days in each month | ||||
| OPERATIONAL DATA | ||||
| Grooming: | ||||
| The Groomer can groom 5 dogs a day, 5 days a week | ||||
| Each grooming takes 1.5 labor hours | ||||
| Day Care: | ||||
| The Day Care can house 10 large dogs and 12 small dogs daily. | ||||
| Day Care is offered 6 days a week | ||||
| Boarding: | ||||
| There are 12 kennels (single dog only). | ||||
| Boarding (kennel services) is offered every day | ||||
| Facilities: | ||||
| The Grooming facility is 200 square feet | ||||
| The Boarding facility is 2,500 square feet | ||||
| The Day Care facility is 1,500 square feet | ||||
| General: | ||||
| Loan for start-up costs – monthly payment of $420; in effect immediately; limited cash and loan funding – used angel investors | ||||
| Modest monthly draw of $600 a month for first year; should be divided evenly amoung the services (grooming, day care, boarding) | ||||
| SALARY & HIRING DATA | ||||
| Groomer (Allison) – $12.00 an hour, 40 hours a week | ||||
| Day Care Attendant (Beverly) – $9.00 per hour, based on need | ||||
| Receptionist (Cathie) – $8.50 per hour, 30 hours a week | ||||
| Kennel Attendant (Ben) – $11.50 per hour, based on need | ||||
| OTHER COST DATA | ||||
| Grooming: | ||||
| Dog Grooming Arm – $300 | . | |||
| Grooming Table – $900 | ||||
| Grooming Tub – $2,800 | ||||
| Clippers – $136.99; can be used for 100 grooms | ||||
| Shampoo – $103.96 per 5-gallon pail; can be used for 100 grooms | ||||
| Salon Tuff Capri Mobile Carry Cart – $90 | ||||
| Scissors (7 inch straight) – $194.99; used for 200 grooms | ||||
| Scissors (ear and nose) – $7.49; used for 200 grooms | ||||
| Day Care: | ||||
| Fencing for Day Care area – $1,249 | ||||
| Fencing Installation – $1,000 | ||||
| Toys – $3.29 per 6 pack; one toy will last for two dogs in day care per day | ||||
| Rubberized Flooring for Day Care – $3,800 | ||||
| Boarding: | ||||
| 12 Kennels; Depreciation is $80 per month | ||||
| General: | ||||
| Food & Water bowls – $3.59 per unit | ||||
| Day Care – two bowls last for every 75 dogs that attend daycare | ||||
| Boarding – two bowls last for every 100 dogs boarded; two bowls per kennel | ||||
| Grooming – each bowl lasts for 20 grooms and you need 4 bowls at all times | ||||
| Towels – $34.99 per 12 pack | ||||
| Day Care – 12 towels for every 25 dogs | ||||
| Boarding – 12 towels for every 40 dogs | ||||
| Grooming – 2 towels for every groom per day | ||||
| Heating System – $10,000; Depreciation is $83 per month; Allocate based on square footage | ||||
| Rent – $650 per month; Allocate based on square footage | ||||
| Utilities / Insurance – $600 per month; Allocate based on square footage | ||||
| Cage Bank – $2,200 per set of 5 | ||||
| Dryer – $1,250 | ||||
| Cleaning Products | ||||
| Odoban – $14.55 per gallon; Each area wil dilute 1 oz to 1 gallon of water; Allocate based on square footage | ||||
| Simple Green – $15.66 per gallon; Each area will dilute 1 oz to 1 gallon of water; Allocate based on square footage | ||||
| . |
ACC202 – MANAGERIAL ACCOUNTING
HOME
Cost Classification
| Milestone One – Cost Classification | ||||||
| INSTRUCTIONS: | ||||||
| Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. | ||||||
| The Fixed and Variable cost classifications have been provided for you. | ||||||
| Item/Cost | Direct Material | Direct Labor | Overhead | Period Costs | Fixed | Variable |
| Salary – Collar maker | × | x | ||||
| Salary – Leash maker | × | x | ||||
| Salary – Harness maker | × | x | ||||
| Salary – Receptionist | × | × | ||||
| High-tensile strength nylon webbing | × | x | ||||
| Polyester/nylon ribbons | × | x | ||||
| Buckles made of cast hardware | × | x | ||||
| Depreciation on sewing machines | × | x | ||||
| Rent | × | x | ||||
| Utilities and insurance | × | x | ||||
| Scissors, thread, and cording | × | x | ||||
| Price tags | × | x | ||||
| Office supplies | × | × | ||||
| Other business equipment | × | × | ||||
| Loan payment | × | x | ||||
| Salary to self | × | x | ||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Variable and Fixed Costs
| Milestone One – Variable and Fixed Costs | ||||||||||
| Collars | ||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||
| High-tensile strength nylon webbing | $ 4.00 | Collar maker's salary (monthly) | $ 2,773.33 | High tensile nylon = 12/3=4 | Collar maker's salary = 40hours×16×4.33 Weeks=2771 | |||||
| Polyester/nylon ribbons | $ 3.00 | Depreciation on sewing machines | $ 55.00 | polyester nylon =9/3=3 | Depreciation = 165/3= 55 | |||||
| Buckles made of cast hardware | $ 2.00 | Rent | $ 250.00 | Buckles made of cast hardware = 0.5×4=2 | Rent = 500/1500 squarefootage=0.33×750 = 250 | |||||
| Price tags | $ 0.10 | Utilities and insurance | $ 200.00 | Utilities and insurance = 600/1500×500 = 200 | ||||||
| Scissors, thread, and cording | $ 400.00 |