5-2 Milestone Three: Project Workbook
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MILESTON 4 ASSIGNMENT MUST BE COMPLETED FIRST THEN THIS ASSIGNMENT CAN BE COMPLETED. THE SAME PERSON COMPLETING MILESTONE 4 WILL ALSO BE COMPLETING THIS ASSIGNMENT TO MAKE SURE ACCURACY
Scenario
It has now been one month since you launched your business. You are meeting with a few investors soon to share your vision for the company and to ask for more funding. You will be sharing your company’s financial health at this meeting. To do that, you need to determine and analyze your company’s performance over the last month using the data provided.
Prompt
Use the information in the Milestone Three Actual Costs and Revenue Data Appendix Word Document to evaluate your company’s performance, and complete the remaining tabs in the Project Workbook Spreadsheet that you used for the Milestone One and Two assignments.
Specifically, you must address the following rubric criteria:
- Statement of Cost of Goods Sold: Prepare the statement of cost of goods sold in the “COGS” tab of the workbook. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
- Income Statement: Use the given revenue data to prepare the “Income Statement” tab table and calculate the net income. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
- Variance Analysis: Prepare the data in the “Variances” tab to determine whether the variances are favorable or unfavorable. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
- Complete the data table for the variances by entering the budgeted (standard) and actual labor and material values. Remember to use the estimates for expected sales from your Milestone Two assignment.
- Determine the variances for direct labor and direct materials in the “Variances” tab.
- Evaluate the significance of the variances in the “Variances” tab, and mark them as favorable or unfavorable.
Guidelines for Submission
Submit the Project Workbook with all tabs completed. This file should be completed and submitted using Microsoft Excel.
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 | Scissors, thread and coding = 1200/3=400 | ||||||||||
| Loan payment | $ 183.33 | |||||||||||
| Salary to self | $ 166.67 | |||||||||||
| Total Variable Costs per Collar | $ 9.10 | Total Fixed Costs | $ 4,028.33 | Total variable costs per collar =4+3+2+0.1=9.1 | Total fixed costs per collar =2773+55+250+200+400+183+167= 4028.33 | |||||||
| Leashes | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | $ 6.00 | Leash maker’s salary (monthly) | $ 2,773.33 | High tensile strength=12/2 = 6 | Leash makers salary = 40 hours×16 per hour × 4.33 weeks = 2773.33 | |||||||
| Polyester/nylon ribbons | $ 4.50 | Depreciation on sewing machines | $ 55.00 | Polyester nylon = 9/2 = 4.5 | Depre ciation on sewing machines = 165/3 = 55 | |||||||
| Buckles made of cast hardware | $ 1.50 | Rent | $ 250.00 | Buckles made of cast hardware = 3×0.5 =1.5 | Rent = 500/1500 multiplied by750 = 250 | |||||||
| Price tags | $ 0.10 | Utilities and insurance | $ 200.00 | price tags are already given as 0.1 | Utilities and insurance = (600/1500)×500=200 | |||||||
| Scissors, thread, and cording | $ 400.00 | Scissors thread and coding = 1200/3 = 400 | ||||||||||
| Loan payment | $ 183.33 | Loan payment = 550/3 = 183.33 | ||||||||||
| Salary to self | $ 166.67 | Salary to self = 500/3 = 166.666 | ||||||||||
| Total Variable Costs per Leash | $ 12.10 | Total Fixed Costs | $ 4,028.33 | Total Vc per leash= 6+4.5+1.5+0.1 = 12.1 | Total FC per leash = 2773+55+250+200+400+183+167 = 4028.3 | |||||||
| Harnesses | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | $ 6.00 | Harness maker’s salary | $ 2,946.40 | High tensile strength nylon= 12/2 = 6 | Harness makers salary = 40 hours×17per hour×4.333 = 2946.4 | |||||||
| Polyester/nylon ribbons | $ 4.50 | Depreciation on sewing machines | $ 55.00 | Polyester ribbopns =9/2 =4.5 | Depreciation on sewing machine = 165/3 = 55 | |||||||
| Buckles made of cast hardware | $ 4.00 | Rent | $ 250.00 | Buckles made of cast hardware = 8×0.5 = 4 | Rent = 500/1500, answer multiplied by 750 = 250 | |||||||
| Price tags | $ 0.10 | Utilities and insurance | $ 200.00 | Price tags are already given =0.1 | Utilities and insurance = 600/1500 answer multiplied by 500 = 200 | |||||||
| Scissors, thread, and cording | $ 400.00 | Scissors,thread and coding = 1200/3 = 400 | ||||||||||
| Loan | $ 183.33 | Loan = 550/3 = 183.33 | ||||||||||
| Salary to self | $ 166.67 | Salary to self = 500/3 = 166.666 | ||||||||||
| Total Variable Costs per Harness | $ 14.60 | Total Fixed Costs | $ 4,201.40 | Total VC per herness =6+4.5+4+0.1= | Total FC per herness = 2946+55+250+200+400+183.33+166.67 = 4201.4 | |||||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Instructions – Milestone 2
| Southern New Hampshire University |
| College of Continuing Education (COCE) |
| ACC202 – Managerial Accounting |
| INSTRUCTIONS FOR MILESTONE 2 (Due Week 4) |
| IMPORTANT NOTE: |
| Make sure to completely review the Rubric for Milestone 2 |
| 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 (Green Tabs): |
| GENERAL |
| Use data from Milestone 1 in your analysis |
| CONTRIBUTION MARGIN ANALYSIS |
| Select a price for each service (grooming, day care, boarding) |
| Determine the variable cost from the Variable_Fixed tab for each service |
| Calculate the contribution margin for each service based on your sales price and the variable cost for that service |
| BREAK-EVEN ANALYSIS |
| Determine the fixed cost from the Variable_Fixed tab for each service |
| Fixed & Variable cost designation is provided |
| Calculate the break-even units (round up) for each service |
| Calculate the break-even units (round up) for suggested target profit levels for each service |
ACC202 – MANAGERIAL ACCOUNTING
HOME
Contribution Margin Analysis
| Milestone Two – Contribution Margin Analysis | |||||
| COLLARS | LEASHES | HARNESSES | |||
| Sales Price per Unit | |||||
| Variable Cost per Unit | |||||
| Contribution Margin | |||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Break-Even Analysis
| Milestone Two – Break-Even Analysis | ||||||
| COLLARS | LEASHES | HARNESSES | ||||
| Sales Price | $ – 0 | $ – 0 | $ – 0 | |||
| Fixed Costs | $ – 0 | $ – 0 | $ – 0 | |||
| Contribution Margin | $ – 0 | $ – 0 | $ – 0 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 300.00 | $ 400.00 | $ 500.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 500.00 | $ 600.00 | $ 650.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
&8ACC202 – MANAGERIAL ACCOUNTING
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Instructions – Milestone 3
| Southern New Hampshire University |
| College of Continuing Education (COCE) |
| ACC202 – Managerial Accounting |
| INSTRUCTIONS FOR MILESTONE 3 (Due Week 5) |
| IMPORTANT NOTE: |
| Make sure to completely review the Rubric for Milestone 3 |
| 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 (Purple Tabs): |
| GENERAL |
| Use data from Milestone 1 and Milestone 2 in your analysis |
| Revenue data needed for the Income Statement will be provided at the end of Module 4 |
| COST OF SERVICES PROVIDED SCHEDULE |
| Use the data at the top of the schedule to complete the report |
| INCOME STATEMENT |
| Use the data at the top of the schedule to complete the report |
| Use the data from your Cost of Services Provided Schedule |
| VARIANCES |
| Use the data at the top of the schedule to calculate the following: |
| Variance |
| Favorable / Unfavorable |
ACC202 – MANAGERIAL ACCOUNTING
HOME
COGS
| Milestone Three – Statement of Cost of Goods Sold | ||
| Beginning Work in Process Inventory | $ – 0 | |
| Direct Materials: | ||
| Materials: Beginning | 0 | |
| Add: Purchases for month of January | ||
| Materials available for use | ||
| Deduct: Ending materials | ||
| Materials Used | ||
| Direct Labor | ||
| Overhead | ||
| Total Costs | ||
| Deduct: Ending Work in Process Inventory | 0 | |
| Cost of Goods Sold | ||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Income Statement
| Milestone Three – Income Statement | ||
| Revenue: | ||
| Collars | $ – 0 | |
| Leashes | – 0 | |
| Harnesses | – 0 | |
| Total Revenue: | $ – 0 | |
| Cost of goods sold | – 0 | |
| Gross profit | $ – 0 | |
| Expenses: | ||
| General and administrative salaries | $ – 0 | |
| Office supplies | – 0 | |
| Other business equipment | – 0 | |
| Total Expenses | $ – 0 | |
| Net Income/Loss | $ – 0 | |
&8ACC202 – MANAGERIAL ACCOUNTING
Variances
| Milestone Three – Variance Analysis | ||||||
| Data for Variance Analysis: | ||||||
| Budgeted (Standard) Hours/Qty |
Budgeted (Standard) Rate |
Actual Hours/Qty |
Actual Rate |
|||
| Labor | ||||||
| Materials | ||||||
| Variances for Collar Sales | ||||||
| Variance | Favorable/ Unfavorable |
|||||
| Direct Labor Time Variance | ||||||
| (Actual Hours – Standard Hours) x Standard Rate | $ – 0 | |||||
| Direct Labor Rate Variance | ||||||
| (Actual Rate – Standard Rate) x Actual Hours | $ – 0 | |||||
| Direct Materials Quantity/Efficiency Variance | ||||||
| (Actual Quantity – Standard Quantity) x Standard Price | $ – 0 | |||||
| Direct Materials Price Variance | ||||||
| (Actual Price – Standard Price) x Actual Quantity | $ – 0 | |||||
&8ACC202 – MANAGERIAL ACCOUNTING
ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix
At the end of the first month of opening your business, you calculate the actual operating costs of the business and the income you earned. You also notice and document the difference in what you budgeted for certain materials and labor against the actual amounts you spent on the same.
For your
statement of
cost of goods sold, use the following data regarding the actual costs incurred by the business over the past month:
Materials purchased: $20,000
Consumed 80% of the purchased materials
Direct labor: $8,493
Overhead costs: $3,765
Note: Assume that the beginning materials and ending work in process are zero for the month.
Use the following revenue and cost information for the
income statement. Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Also, assume that after accounting for weekends and other holidays, there were 20 business days in the first month of operation. For example, if you chose a sales price of $20 per collar, the actual number of collars sold in the month was 33 per day or 33 x 20 = 660 per month.
|
Established Sales Price |
Number of Items Sold per Day |
|
Collars |
|
|
$20 |
33 |
|
$24 |
28 |
|
$28 |
23 |
|
Leashes |
|
|
$22 |
28 |
|
$26 |
23 |
|
$30 |
18 |
|
Harnesses |
|
|
$25 |
25 |
|
$30 |
22 |
|
$35 |
20 |
The other costs incurred by the business include:
General and administrative salaries
Receptionist: $1,950
Office supplies: $200
Other business equipment: $150
Variance
At the end of the month, you find that the labor and materials spent on manufacturing collars was different from what you estimated:
The collar maker had to work nine hours a day instead of eight due to an increased demand for collars.
Because of the increased demand, the hourly rate you paid your employee for making the collars increased to $16.50.
An increase in the cost of raw material led the direct material cost per collar to increase to $10.
However, you also made and sold 60 more collars than you expected to sell in the month.
You now need to determine the
variance in the materials and labor cost from what you estimated in Milestone Two based on the market research data.
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