Microsoft Excel fill out info

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 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.
o
Choose a sales price for each product.
o
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.
o
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.
o
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.
Milestone Two: Market Research Data
You have conducted some market research for style and size of products you want to use to launch
your business. The market research has indicated the following sales price ranges will be optimal for
your area depending on style of products you choose to sell:
●
Collars
o With pricing at $20 per collar, you can expect to sell 30 collars per day.
o With pricing at $24 per collar, you can expect to sell 25 collars per day.
o With pricing at $28 per collar, you can expect to sell 20 collars per day
●
Leashes
o With pricing at $22 per leash, you can expect to sell 28 leashes per day.
o With pricing at $26 per leash, you can expect to sell 23 leashes per day.
o With pricing at $30 per leash, you can expect to sell 18 leashes per day.
●
Harnesses
o With pricing at $25 per harness, you can expect to sell 25 harnesses per day.
o With pricing at $30 per harness, you can expect to sell 22 harnesses per day.
o With pricing at $35 per harness, you can expect to sell 20 harnesses per day.
Additionally, you will need to compare your break-even points for the following target profits for
each area of your business to determine your prices:
●
Collars
o Break-even
o $300 target profit each month
o $500 target profit each month
●
Leashes
o Break-even
o $400 target profit each month
o $600 target profit each month
●
Harnesses
o Break-even
o $500 target profit each month
o $650 target profit each month
Remember that all break-even and target points must be in whole units (we cannot sell a partial
unit). Round up when calculating partial units to ensure costs are covered. Excel tip – use
ROUNDUP function
H
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
x
Salary – Leash maker
x
x
Salary – Harness maker
x
x
x
Salary – Receptionist
High-tensile strength nylon webbing
x
x
Polyester/nylon ribbons
x
x
Buckles made of cast hardware
x
x
Depreciation on sewing machines
x
x
Rent
x
x
Utilities and insurance
x
x
Scissors, thread, and cording
x
x
Price tags
x
x
Office supplies
x
Other business equipment
x
Loan payment
x
x
Salary to self
x
x
ACC202 – MANAGERIAL ACCOUNTING
H
Milestone One – Variable and Fixed Costs
Workings
Collars
Item
Variable Cost/Item
Item
High-tensile strength nylon webbing
Polyester/nylon ribbons
Buckles made of cast hardware
Price tags
$
$
$
$
4.00
3.00
2.00
0.10
Collar maker’s salary (monthly)
Depreciation on sewing machines
Rent
Utilities and insurance
Scissors, thread, and cording
Loan payment
Salary to self
$
$
$
$
$
$
$
Fixed Costs
2,773.33
55.00
250.00
200.00
400.00
183.33
166.67
Total Variable Costs per Collar
$
9.10
Total Fixed Costs
$
4,028.33
Variable cost
high tensile strength nylon webbing cost: $12/3 = $4 per collar
Ribbon cost: $9/3 = $3 per collar
2773.333
55
250
200
400
183.3333
166.6667
Buckle cost: $0.50 * 4 = $2 per collar
Price tags 0.10 each
Total variable cost per collar = $4 (webbing) + $3 (ribbon) + $2 (buckle)+ 0.1 (price tag) = $9.10 per collar
2773.333
-55
250
200
400
183.3333
166.6667
Variable cost
high tensile strength nylon webbing cost: $12/2 = $6 per collar
Leashes
Item
Variable Cost/Item
Item
High-tensile strength nylon webbing
Polyester/nylon ribbons
Buckles made of cast hardware
Price tags
$
$
$
$
Leash maker’s salary (monthly)
Depreciation on sewing machines
Rent
Utilities and insurance
Scissors, thread, and cording
Loan payment
Salary to self
$
$
$
$
$
$
$
2,773.33
55.00
250.00
200.00
400.00
183.33
166.67
Total Fixed Costs
$
4,028.33
Total Variable Costs per Leash
$
6.00
4.50
1.50
0.10
12.10
Fixed Costs
Ribbon cost: $9/2 = $4.5 per collar
Buckle cost: $0.50 * 3 = $1.5 per collar
Price tags 0.10 each
Total variable cost per collar = $6 (webbing) + $4.5(ribbon) + $1.5 (buckle) + 0.1 (price tag)= $12.1per collar
$4,028.33
Harnesses
Item
Variable Cost/Item
Item
High-tensile strength nylon webbing
Polyester/nylon ribbons
Buckles made of cast hardware
Price tags
$
$
$
$
6.00
4.50
4.00
0.10
Harness maker’s salary
Depreciation on sewing machines
Rent
Utilities and insurance
Scissors, thread, and cording
Loan
Salary to self
$
$
$
$
$
$
$
Fixed Costs
2,946.68
55.00
250.00
200.00
400.00
183.33
166.67
Total Variable Costs per Harness $
14.60
Total Fixed Costs
$
4,201.68
2946.667
55
250
200
400
183.3333
166.6667
ACC202 – MANAGERIAL ACCOUNTING
high tensile strength nylon Webbing cost: $12/2 = $6 per harness
Ribbon cost: $9/2 = $4.50 per harness
Buckle cost: $0.50 * 8 = $4 per harness
Price tag each at 0.10
Total variable cost per harness = $6 (webbing) + $4.50 (ribbon) + $4 (buckle) + price tag 0.1 = $14.60 per harness
H
Milestone Two – Contribution Margin Analysis
COLLARS
LEASHES
Sales Price per Unit
Variable Cost per Unit
Contribution Margin
ACC202 – MANAGERIAL ACCOUNTING
HARNESSES
H
Milestone Two – Break-Even Analysis
COLLARS
LEASHES
HARNESSES
Sales Price
$
–
$
–
$
–
Fixed Costs
$
–
$
–
$
–
Contribution Margin
$
–
$
–
$
–
Break-Even Units (round up)
Target Profit
–
$
Break-Even Units (round up)
Target Profit
Break-Even Units (round up)
–
300.00
$
–
$
$
–
500.00
–
400.00
–
$
600.00
–
ACC202 – MANAGERIAL ACCOUNTING
500.00
–
$
650.00
–