2-1 Final Project Milestone One: First Part of Workbook

In this first milestone of your final project, you will submit your cost classification tabs in your

workbook

. Correctly classifying your costs is essential for successfully completing the next steps in your project, so be sure to carefully and thoroughly follow the instructions. 

MILESTONE ONE ONLY

To complete this assignment, review the prompt and grading rubric in the

Milestone One Guidelines and Rubric

document. When you have finished your work, submit the assignment here for grading and instructor feedback.

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

Company Profile

Variable & Fixed Costs

Cost Classification

Contribution Margin

Break-Even Analysis

COGM Schedule

Income Statement

Variances

Instructions Milestone 1 Instructions Milestone 2 Instructions Milestone 3

ACC202 – MANAGERIAL ACCOUNTING

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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

COMPANY PROFILE TAB

Determine a company name. Be creative (e.g. “Inspiring Dog Care”)
Pick a location (e.g. “Chicago”)
Define your company’s vision and mission for how your business will add value to the community

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

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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

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ACC202 – MANAGERIAL ACCOUNTING

ACC202 – MANAGERIAL ACCOUNTING

ACC202 – MANAGERIAL ACCOUNTING

MILESTONE 1 – Company Profile

Compnay Name XYZ Corporation

Location

Vision

Mission

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XYZ Corporation
MILESTONE 1 – Cost Classification Exercise

INSTRUCTIONS:

Putting an X in the appropriate spot, classify the costs highlighted in yellow as: Direct Material, Direct Labor, Overhead, or Period Costs.
Other costs have been provided for you.

The fixed and variable cost classifications have been provided for you. For more information see Objective 1 in Chapter 5.

Item/Cost
Direct

Material
Direct
Labor Overhead Period Costs Fixed Variable

Groomer x
Day care attendant x
Receptionist x
Kennel attendant x x
Food and water bowls x
Depreciation on kennels x x
Rent x
Utilties and insurance x x
Grooming tub 48″ x
Depreciation on heating system x
Clippers x x
Shampoo (Crystal Clear: five-gallon pail) x
Towels x x
Scissors (7-inch straight, ear & nose) x x
Toys (used in day care only) x
Cleaning products (used throughout) x
Dryer x

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XYZ Corporation
MILESTONE 1 – Variable & Fixed Cost Exercise

INSTRUCTIONS:
Determine the per unit cost for each dog.
Fill in the blanks to get the per unit cost and fixed cost of each service.

Based on 5 grooms per day
GROOMING

Item Variable Costs Item Fixed Costs

Shampoo $ – Groomer $ –
Clipper(s) 1.37 Rent 30.95
Bowls 0.72 Loan 20.00
Towels 5.83 Utilities and Insurance 28.57
Scissors 1.01 Depreciation on heating system 3.95

Cleaning Products: Odoban 2.08
Cleaning Products: Simple Green 2.36
Draw 200.00

Total Variable Costs $ 9.97 Total Fixed Costs $ 2,367.91

Based on 22 dogs per day for six days a week. Assume 25 operating days for kennel and 22 eight-hour work days for kennel attendant.
DAY CARE

Item Variable Costs Item Fixed Costs

Day care attendant $ 2.88 Rent $ 232.14
Toys 0.27 Loan 150.00
Bowls 0.10 Utilities and Insurance –
Towels 1.40 Depreciation on heating system 29.64

Cleaning Products: Odoban 15.59
Cleaning Products: Simple Green 16.78
Draw 200.00

Total Variable Costs Total Fixed Costs $ 858.44

Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant.
BOARDING

Item Variable Costs Item Fixed Costs

Kennel attendant $ – Depreciation on kennels $ 80.00
Bowls 0.86 Rent 386.90
Towels 0.87 Loan 250.00

Utilities and Insurance –
Depreciation on heating system 49.40
Cleaning Products: Odoban 25.98
Cleaning Products: Simple Green 29.55
Draw 200.00

Total Variable Costs $ 7.35 Total Fixed Costs $ 1,378.97

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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

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XYZ Corporation
MILESTONE 2 – Contribution Margin per Unit & Contribution Margin Ratio

INSTRUCTIONS:
Select a price from the scenarios below and compute the contribution for each service based on your selected price.
Variable cost per unit comes from your Variable_Fixed tab completed in Milestone 1.

SCENARIO (choose one from each category):
Dog Day Care

1. With pricing at $18 per dog per day, you can expect to have 22 dogs per day.
2. With pricing at $20 per dog per day, you can expect to have 15 dogs per day.
3. With pricing at $25 per dog per day, you can expect to have 10 dogs per day.

Overnight Boarding
1. With pricing at $25 per dog per day, you can expect to have 12 dogs per day.
2. With pricing at $28 per dog per day, you can expect to have 10 dogs per day.
3. With pricing at $30 per dog per day, you can expect to have 7 dogs per day.

Basic Groom
1. With pricing at $25 per dog per day, you can expect to have 5 dogs per day.
2. With pricing at $30 per dog per day, you can expect to have 4 dogs per day.
3. With pricing at $35 per dog per day, you can expect to have 3 dogs per day.

DAY CARE BOARDING GROOMING

Sales Price per Unit $ – $ – $ –
Variable Cost per Unit – – –

Contribution Margin $ – $ – $ –

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XYZ Corporation
MILESTONE 2 – Break-Even Analysis

INSTRUCTIONS:
Show all steps and calculations to determine the break-even.
Determine the break-even for the target profit levels as outlined in the instructions.

Break-even = Fixed Costs / Contribution Margin

DAY CARE BOARDING GROOMING

Sales Price $ – $ – $ –

Fixed Costs $ – $ – $ –

Contribution Margin $ – $ – $ –

Break-even Units (round up) – – –

Target Profit $ 417.00 $ 583.00 $ 1,000.00

Break-even Units (round up) – – –

Target Profit $ 667.00 $ 909.00 $ 1,500.00

Break-even Units (round up) – – –
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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

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XYZ Corporation
MILESTONE 3 – Statement of

Cost of Services

INSTRUCTIONS:
The following are the actual numbers for January:

Materials
Purchased $5,000 of Materials
Consumed 40% of those purchased materials

Direct Labor
Direct Labor was $6,240

Overhead
Overhead was $2,800

XYZ Corporation
Statement of Cost of Services

For the Month Ended January 31, xxxx

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 Service Costs

Deduct: Ending Work in Process Inventory

Cost of Services

* Cost of Goods Sold = Cost of Services
There is no finished goods inventory to maintain.

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XYZ Corporation
MILESTONE 3 – Income Statement

INSTRUCTIONS:
Complete the Statement in proper form
Revenue will be provided in an Announcement at the end of Module 4

(based on actual number of services for your pricing levels)

Additional Information necessary to complete the Income Statement:
General & Administrative Salaries paid = $1,200
Advertising = $100
Cleaning Products = $120
Depreciation = $83
Rent = $650
Loan = $420
Utilities & Insurance = $600

XYZ Corporation
Income Statement

For the Month Ended January 31, xxxx

Revenue:
Grooming $ –
Day Care –
Boarding –

Tota Revenue $ –
Cost of Services * –
Gross Profit $ –

Expenses:
G&A Salaries $ –
Advertising –
Cleaning Products –
Depreciation –
Rent –
Loan –
Utilities and Insurance –

Total Expenses $ –

Net Income / Loss $ –

* Cost of Goods Sold = Cost of Services
There is no finished goods inventory to maintain.
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XYZ Corporation
MILESTONE 3 – Variance Analysis

INSTRUCTIONS:
Prepare the variances and identify whether they are favorable or unfavorable.
The below website will provide further assistance with variances:

http://accounting-simplified.com/management/variance-analysis/material/price.html

DATA FOR VARIANCE ANALYSIS:

Standard
Hours / Qty

Standard
Rate

Actual
Hours / Qty

Actual
Rate

Grooming Labor 150 $ 12.00 180 $ 11.50

Grooming Materials 1,000 $ 2.00 1,200 $ 3.00

Variance
Favorable/

Unfavorable
Groomer Direct Labor Time Variance

(Actual Hours – Standard Hours) x Standard Rate $ –

Groomer Direct Labor Rate Variance
(Actual Rate – Standard Rate) x Actual Hours $ –

Direct Materials Quantity/Efficiency Variance
(Actual Quantity – Standard Quantity) x Standard Price $ –

Direct Materials Price Variance
(Actual Price – Standard Price) x Actual Quantity $ –

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ACC 202 Milestone One Guidelines and Rubric

Overview: In the first milestone of your final project, you will determine and classify the costs necessary for opening your business. This is a critical step that
must be done correctly for you to successfully complete the subsequent milestones and the final submission.

Scenario: Prior to Opening, Part I: You plan to open a pet-services business that will offer dog grooming, day care, and boarding. You can be creative in deciding
the name of your business (e.g., “Inspiring Dog Care”), its geographical location (e.g., Chicago), and its mission and vision for adding value to the community. You
will be asked to make choices for a few other details to customize your case; otherwise, you should use the information below.

There are 12 kennels (single dog only) and the day care area can house 10 large dogs and 12 small dogs each day. The grooming facility is 200 square feet, the
boarding facility is 2,500 square feet, and the day care is 1,500 square feet. Your groomer can groom five dogs a day for five days a week; each groom consists of
1.5 labor hours. You also offer dog day care six days a week, and kenneling every day. You have taken out a loan for start-up costs and the monthly payment is
$420; it goes into effect immediately and should be accounted for in your costs. With limited cash contribution and loan funding, you located two angel
investors. You will collect a modest draw for the first year of $600 a month; remember to divide evenly among the services.

Note: For simplicity, base all calculations using 30 days in each month.

You estimate the following staffing needs:

 A groomer who will be paid $12/hour and work 40 hours a week

 A day care attendant who will be paid $9/hour and will work 22 eight-hour days per month

 A receptionist who will be paid $8.50/hour and work 30 hours a week

 A kennel attendant who will be paid $11.50/hour and will work 22 eight-hour days per month

A complete list of additional costs is provided below:

 Food and water bowls: $3.59/unit
o Daycare: Two bowls last for every 75 dogs that attend daycare.
o Boarding: Two bowls last for every 100 dogs that are boarded; you need two bowls per kennel.
o Grooming: Each bowl lasts for 20 grooms and you need four bowls at all times.

 Fencing for daycare area: $1,249; installation of fencing: $1,000

 Dog grooming arm: $300

 12 kennels: $9,500; depreciation is $80/month

 Rent: $650/month; allocate based on square footage

 Utilities/insurance: $600/month; allocate based on square footage

 Grooming table: $900

 Grooming tub: $2800

 Heating system: $10,000; depreciation is $83/month; allocate based on square footage

 Clippers: $136.99; can be used for 100 grooms

 Shampoo: $103.96 per five-gallon pail, which can be used for 100 grooms

 Cage bank: $2200 per set of 5

 Salon Tuff Capri mobile carry cart: $90

 Towels: $34.99 per 12 pack
o Day care: You need to have 12 towels for every 25 dogs.
o Boarding: You need to have 12 towels for every 40 dogs.
o Grooming: You need to have two towels for every groom per day.

 Scissors: (1) 7-inch straight is $194.99, and (1) ear-and-nose is $7.49; each can be used for 200 grooms.

 Toys: $3.29 per 6-pack; one toy will last for two dogs in day care, per day.

 Cleaning products:
o Odoban: $14.55/gallon: Each area will dilute 1 oz to 1 gallon of water; allocate based on square footage.
o Simple Green: $15.66/gallon: each area will dilute 1 oz to 1 gallon of water; allocate based on square footage.

 Dryer: $1250

 Rubberized flooring for day care: $3800

Prompt: Complete the first three tabs, addressing the following critical elements:

 Determine the unique characteristics of your company in the “Company Profile” tab of your workbook.

 Accurately classify all of your costs in the “Cost Classification” tab of your workbook.

 Determine your per-unit cost per dog in the “Variable_Fixed” tab of your workbook. (Most costs are filled in for you. Only compute the missing costs.)

Rubric
Guidelines for Submission: You must complete the first three tabs in your workbook, following the format in the provided template within each sheet.

Critical Elements Proficient (100%) Not Evident (0%) Value

Characteristics of
Your Company

Outlines the company’s profile, including its
name, location, and mission and vision

Does not outline the company’s profile 10

Classify All of Your
Costs

Classifies all costs in the “Cost Classification”
tab of the workbook

Does not classify costs in the “Cost
Classification” tab of the workbook

45

Per-Unit Cost Determines the per-unit cost per dog in the
“Variable_Fixed” tab of the workbook

Does not determine the per-unit cost per dog in
the “Variable_Fixed” tab of the workbook

45

Total 100%