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Cookie Business Final Project
Now that your cookie business is well underway, you are going to use the knowledge that you have gained in this course to
evaluate the financial information for the company. You will be creating a series of reports and analyzing the results using
the templates provided to guide you through the project.
Using the Unit VII Final Project Template, prepare a four- to five-page written report (including spreadsheets) with at least
three scholarly sources. Your report will provide the following information:
Introduction
Part 1: Based on the data presented in the Unit VII Spreadsheet Template in Excel (CM Breakeven tab):
Calculate the contribution margin (CM) for each of the three products sold at the cookie business.
Calculate the weighted average CM.
Calculate the breakeven point.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this
report. Discuss the results based on your calculations as far as which type of cookie you think is the most profitable, which
has the highest CM, etc.
Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete the
calculations listed below.
Calculate the value of ending inventory under full or absorption costing.
Calculate the value of ending inventory under variable costing.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this
report. Discuss the results, and comment on which method you think is more helpful to managers and why.
Part 3: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Special Order tab), calculate the net
increase or decrease in profit if they take the special order.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this
report. Discuss the results and comment on if you think the cookie business should take on this special order of cookies for
a wedding. Business has been slow the last few months, and the offer is less than the usual selling price for the cookies.
As part of your discussion, include both quantitative (based on the numbers) and qualitative (not based on numbers) factors
that would go into the decision to take on the special order.
Part 4: Based on the data presented in the Unit VII Spreadsheet Template in Excel (IRR tab), calculate the internal rate of
return (IRR) for the new equipment purchase.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this
report. Note: the PV Annuity table is provided for you. Discuss if you think the cookie business should accept or reject the
purchase of the new equipment and why.
Additional information has come to your attention regarding the equipment purchase. One of the partner’s brother owns the
company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type
of transaction.
Part 5: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Cash Budget tab), calculate the cash
receipts for the first quarter of this year.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this
report. Discuss your observations about the way cash is collected if the company needs $150,000 per month for expenses.
Part 6: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Variances tab), complete the following
calculations.
Calculate the material variances.
Calculate the labor variances.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss your observations about the variances and ways to plan to improve any of the variances.
Cookie Business
Units Sold
Sales
Less: Variable Costs
Contribution Margin
Less: Common Fixed Costs
Profit
Per item Contribution Margin
Weighted Average Contribution
Margin
Break-even point in units
Chocolate Chip
Sugar
Specialty
1,500,000
980,000
300,000
$ 1,875,000.00 $ 882,000.00 $ 1,050,000.00 $
$ 690,000.00 $ 205,800.00 $
81,000.00 $
$ 1,185,000.00 $ 676,200.00 $ 969,000.00 $
$
$
Total
2,780,000
3,807,000.00
976,800.00
2,830,200.00
125,000.00
2,705,200.00
Cookie Business
Productions Costs:
Direct material
Direct labor
Variable manufacturing overhead
Total variable manufacturing costs per unit
Fixed manufacturing overhead per year
$
$
$
$
0.60
1.00
0.40
2.00
$ 139,000.00
In addition, the company has fixed selling and administrative costs:
Fixed selling costs per year
$ 50,000.00
Fixed administrative costs per year
$ 65,000.00
Selling price per cookie
Number of cookies produced
Number of cookies sold
Full (absorption) costing :
Full cost per unit
Ending Inventory Full (absorption) costing
Variable costing :
Variable cost per unit
Ending Inventory Variable costing
$
3.75
2,780,000
2,600,000
Cookie Business
Number of cookies needed
Discounted price per cookie
Normal price per cookie
Cost of special printed design per cookie
Cost of tool needed to make the design
Revenue for special order
Costs for special order:
Design cost
Tool cost
Total Variable Manufacturing Cost
Net profit
$
$
$
$
1,000
2.75
3.75
0.50
100.00
Cookie Business
As the owner of the Cookie Business, you are considering the following investment:
Purchase of new equipment
Expected annual increase in sales
Time frame
Acceptable rate needed
Calculate the Internal Rate of Return:
PV of annuity factor
Internal rate of return
Accept or reject
$ 250,000.00
$ 48,017.50
7 years
9%
PV of Annuity Table
n
1%
1
0.9901
2
1.9704
3
2.941
4
3.902
5
4.8534
6
5.7955
7
6.7282
8
7.6517
9
8.566
10
9.4713
11 10.3676
12 11.2551
13 12.1337
14 13.0037
15 13.8651
2%
0.9804
1.9416
2.8839
3.8077
4.7135
5.6014
6.472
7.3255
8.1622
8.9826
9.7869
10.5753
11.3484
12.1063
12.8493
3%
0.9709
1.9135
2.8286
3.7171
4.5797
5.4172
6.2303
7.0197
7.7861
8.5302
9.2526
9.954
10.635
11.2961
11.938
4%
0.9615
1.8861
2.7751
3.6299
4.4518
5.2421
6.0021
6.7327
7.4353
8.1109
8.7605
9.3851
9.9857
10.5631
11.1184
5%
0.9524
1.8594
2.7233
3.546
4.3295
5.0757
5.7864
6.4632
7.1078
7.7217
8.3064
8.8633
9.3936
9.8986
10.3797
6%
0.9434
1.8334
2.673
3.4651
4.2124
4.9173
5.5824
6.2098
6.8017
7.3601
7.8869
8.3838
8.8527
9.295
9.7123
8%
0.9259
1.7833
2.5771
3.3121
3.9927
4.6229
5.2064
5.7466
6.2469
6.7101
7.139
7.5361
7.9038
8.2442
8.5595
10%
0.9091
1.7355
2.4869
3.1699
3.7908
4.3553
4.8684
5.3349
5.759
6.1446
6.4951
6.8137
7.1034
7.3667
7.6061
12%
0.8929
1.6906
2.4018
3.0374
3.6048
4.1114
4.5638
4.9676
5.3283
5.6502
5.9377
6.1944
6.4236
6.6282
6.8109
Cookie Business
The budgeted credit sales are as follows:
December last year
January
February
March
Collection:
Month of the sale
Month following the sale
$
$
$
$
250,000
125,000
300,000
90,000
80%
20%
Estimated cash receipts
January
Last month’s sales
Current month’s sales
Total
February
March
Cookie Business
Actual Total Cost of Direct Materials
Standard Total Cost of Direct Materials
Actual Materials Used
Standard Materials Used
$
$
225,000
224,800
30
31
Actual Direct Labor Rate
Standard Labor Rate
Actual Hours Worked
Standard Hours Worked
$
$
15.50
15.00
45
40
Amount
Calculate Materials Variances:
Materials Price Variance
Materials Quantity Variance
Calculate Labor Variances:
Labor Rate Variance
Labor Efficiency Variance
Favorable/
Unfavorable
1
Title of the Paper Goes Here
Student Name
Institution
ACC 5301 Management Applications of Accounting
Instructor
Date
2
Abstract
The abstract is an overview of the paper, written after completion. Other researchers use the
abstract to determine if your work will be useful to them. The abstract should include the
background, hypothesis or research question, methodology for data collection and analysis, the
findings of your research, and conclusions. It should be between 100–150 words. This is done
when the paper is complete.
3
Title of Paper
Remember this part of the paper is double spaced in APA format.
The Introduction should lead readers into the topic and its importance. Introductions
typically include the overall topic of the paper, the specific focus of the paper within the larger
topic, the main points in the paper, the kind of paper (study, argument, critique, discussion), and
the purpose.
Writing tip: The length of the introduction should be in proportion to the length of the
paper. Also ask yourself, “With my purpose and my audience, how do I engage my readers
best?” In the introduction, you set the tone of the piece, establish your voice, and demonstrate
your writing style; be authentic to your purpose and your audience.
Part 1 Contribution Margin/Breakeven
Embed your spreadsheet for this section here and discuss the results.
Part 2 Full and Variable Costing
Embed your spreadsheet for this section here and discuss the results.
Part 3 Special Order
Embed your spreadsheet for this section here and discuss the results.
Part 4 Internal Rate of Return
Embed your spreadsheet for this section here and discuss the results.
Part 5 Cash Budget
Embed your spreadsheet for this section here and discuss the results.
Part 6 Material and Labor Variance
Embed your spreadsheet for this section here and discuss the results.
4
Conclusions and Recommendations
The conclusion section should summarize for the readers the topics of importance that led
to your final conclusions/analysis regarding this case. Include some specific areas of focus from
your analysis to reinforce your conclusion.
5
References
Include complete references in proper APA format for all of the citations listed in your
paper. Be sure to use the library for the required number of sources. Additional sources can be
used but should be scholarly. Present your references in alphabetical order.
