Investor’s Report
Competencies
In this project, you will demonstrate your mastery of the following competencies:
- Describe how managerial accounting supports management information systems
- Utilize managerial accounting techniques and models to support an organization’s strategic plan
- Explain how managerial accounting is used to make decisions about short-term business opportunities, capital investments, and evaluating operational performance
Scenario
Your business has been open for a month, and you have prepared an income statement and completed a variance analysis on the data. Now you will meet with investors and a few other internal stakeholders to share your company’s progress over the past month and how it has performed with respect to your cost and budget projections. The investors would like to see the thought process behind your financial strategy and how your company has performed in its first month. They have therefore asked you to present a report that includes the costing and income data from your Project Workbook.
Directions
Submit a detailed report to your potential investors and other stakeholders to explain and defend your costing strategies and to share your business’s performance to date. Your report can be in the form of a PowerPoint presentation or a Word document (based on the templates provided in the What to Submit section). In either format, be sure to effectively communicate with your stakeholders by breaking down concepts and using investor-friendly language to build their trust and confidence. If you choose to do a PowerPoint presentation, you’ll need to include speaker notes for each slide.
- Introduction: Provide a short overview of your company and the purpose of this report.
Business Overview: Name your company and describe its business and your vision for its future.
Purpose of the Report: Explain the purpose of the report and describe why the information is important.
Methods and Approach: Explain the management accounting methods you used for generating the information that you are about to share in terms of your adherence to industry standards and the American Institute of Certified Public Accountants (AICPA) code of ethics. - Financial Strategy: Review your original business plan and costing strategies.
Costing System: Justify the use of job order costing for this business. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense.
Selling Prices: Share and explain the selling prices you established for each of your products. Be sure to reference your cost-volume-profit analysis in your defense.
Contribution Margin: Share and explain your contribution margin per unit. Be sure to reference your cost-volume-profit analysis in your defense.
Target Profits: Identify your break-even points for achieving different target profits. Then explain the target profits you selected for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense. - Financial Statements: Using the information in the Milestone Two Market Research Data Appendix, assess your financial performance to date.
Statement of Cost of Goods Sold: Share the statement of cost of goods sold and logically interpret the business’s performance against the provided benchmarks.
Income Statement: Share the income statement and logically interpret the business’s performance against the provided benchmarks.
Variances: Illustrate all variances for the direct labor time and the materials price.
Significance of Variances: Evaluate the significance of the variances in terms of the potential to impact future budgeting decisions and planning.
Report for [Company Name]
[Note: To complete this template, replace the bracketed text with your own content. Remove this note before you submit your paper.]
Investor Report for [Company Name]
[Your Name]
[Company Name] 1
Southern New Hampshire University
Introduction
[Outline your company’s business and your vision for its future.]
[Introduce the company and its business. What is your vision for the future of the business? What do you hope to achieve? Where do you see the company in five years or ten?]
Purpose
[Explain the purpose of the report and what you hope to convey about the company and its financials.]
[What do you plan to communicate, and why should your investors pay attention? In other words, try to persuade your investors that the accounting information you are about to share is important.]
Methods and Approach
[Explain some management accounting methods you used to determine your costing strategy, evaluate your financial information, etc., and explain how these methods support the mission and vision of the company.]
[Briefly describe how your report and the data it represents adheres to industry standards and the AICPA code of ethics. In other words, why should your investors trust that you are delivering accurate financial data and that your decision-making process has been ethical?]
Financial Strategy
[In this section, review your original business plan and costing strategies. Remove this note before you submit your paper.]
Costing System
[Outline why the job order costing system works best for your business. Explain in detail the use of job order costing for this business. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense.]
Selling Prices
[List the selling price you chose for each product.]
[Explain and defend the selling prices you established for each product. Why did you choose these prices? Be sure to reference your cost-volume-profit analysis in your defense]
Contribution Margin
[Copy and paste your completed table from the “Contribution Margin Analysis” tab of your Project Workbook.]
[Share and explain your contribution margin per unit. How did you arrive at these numbers? Be sure to reference your cost-volume-profit analysis in your defense.]
Target Profits
[Copy and paste the completed table from the “Break-Even Analysis” tab of your Project Workbook.]
[Specify the break-even points you determined for achieving different target profit levels. Then, explain and defend the target profits you selected for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense.]
Financial Statements
[This section is designed to have you assess your financial performance to date. Remove this note before you submit your paper.]
Statement of Cost of Goods Sold
[Copy and paste your table from the “COGS” tab of your completed Project Workbook.]
[Compare the actual cost of goods sold over the last month and evaluate the company’s performance against the budgeted benchmarks. Are the numbers close to what you expected? Interpret the performance and explain what happened.]
Income Statement
[Copy and paste your table from the “Income Statement” tab of your completed Project Workbook.]
[Based on your income statement, logically interpret the business’s performance against the provided benchmarks. Did the company do as well as expected? Explain what happened.]
Variances
[Copy and paste your table from the completed “Variances” tab of your Project Workbook.]
[Illustrate the variances observed between the planned and actual values for the direct labor time and the direct materials price for collars. What changed?]
Significance of Variances
[Share a summary of your variance analysis. Were the variances favorable or unfavorable?]
[Evaluate the significance of the variances. Are the variances favorable or unfavorable? What does it mean? Explain whether and how your evaluation will affect your budgeting and planning decisions for the next month or quarter.]
References
[Include any references cited in your paper in full APA format. Don’t forget to include in-text citations as well.]
ACC-202
Brittny Deleon
Southern New Hampshire University
7-1 Final Project:
Investor Presentation
901 Main Street
Dallas, TX
75204
COMPANY
PROFILE
Head Over Paws
We believe in a world where furry family
members receive the same level of customer
services as the humans who feed them. We
treat pets as if they were our own and
prioritize their health and well-being over
everything. Our hope is that you will fall ‘Head
Over Paws’ in love with our services!
VISION
A pet is more than just an animal you share
your home with, they are a part of your family!
Our mission is to treat every pet with the
upmost respect. We will love and care for them
as our own! We promise to use the highest-
quality resources and return your pet back to
our care safely. Rest easy knowing your pet is
in great hands with Heat Over Paws!
MISSION
INESTMENT
OPPORTUNITY
Head Over Paws
CODE OF PROFESSIONAL
CONDUCT
American Institute of Certified Public
Accountants
Responsibility
Public Interest
Integrity
Objectivity & Independence
Due Care
Scope & Nature of Services
Cost Classification
Variable & Fixed Costs
Market Research
Contribution Margin Analysis
Break-Even Analysis
Statement of Cost of Services
Income Statement
ACCOUNTIN
G PROCESS
Head Over Paws
JOB ORDER COSTING:
consists of job cost sheets
for each particular product
PROCESS COSTING:
accumulates costs for
each department involvedVS.
COST ACCOUNTING
SYSTEMS
JOB ORDER
COSTING
Head Over Paws
GROOMING
Total variable costs =
$9.97
Total fixed costs =
$2,367.91
BOARDING
Total variable costs =
$7.35
Total fixed costs =
$1,378.97
DAY CARE
Total variable costs =
$4.65
Total fixed costs =
$858.44
SELLING PRICES
Head Over Paws
GROOMING
$25/groom = 5 dogs/day
$30/groom = 4 dogs/day
$35/groom = 3 dogs/day
BOARDING
$25/dog = 12 dogs/day
$28/dog = 10 dogs/day
$30/dog = 7 dogs/day
DAY CARE
$18/dog = 22 dogs/day
$20/dog = 15 dogs/day
$25/dog = 10 dogs/day
TARGET PROFITS
Head Over Paws
• $0 Break-Even: 158
• $1,000 Target Profit:
225
• $1,500 Target profit:
258
GROOMIN
G
• $0 Break-Even: 56
• $417 Target Profit: 84
• $667 Target Profit: 100
DAY CARE
• $0 Break-Even: 67
• $583Target Profit: 93
• $909 Target Profit: 111
BOARDING
GROOMIN
G
$15.03
DAY CARE
$15.35
BOARDING
$20.65
CONTRIBUTION
MARGIN
Head Over Paws
COST VARIANCES
FAVORABLE
VARIANCE:
actual cost is less than
the standard cost
UNFAVORABLE
VARIANCE:
actual cost is greater
than the standard cost
Groomer Direct Labor
Time Variance: $360
UN
FAVORABLE
Groomer Direct Labor
Rate Variance: ($90)
FAVORABLE
Direct Materials
Quantity/Efficiency
Variance: $400
UNFAVORABLE
Direct Materials Price
Variance: $1,200
UNFAVORABLE
COST VARIANCES
Head Over Paws
THANK YOU!
Warren, C.S., Reeve, J.M., & Duchac, J. (2017) Managerial Accounting (14th ed.).
Boston, MA: Cengage Learning.
American Institute of Certified Public Accountants. (2019). AICPA Code of Professional
Conduct. Retrieved from https://pub.aicpa.org/codeofconduct/Ethics.aspx
Accounting-Simplified.com. (n.d.) Direct Material Price Variance. Retrieved from
https://accounting-simplified.com/management/variance-analysis/material/price.html
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References
7
–
1
Final Project Submission:
Presentation to Investors
By Jamie Smith
1
P wtastic Dog Grooming and Boarding
Pawtastic Dog Grooming and Boarding offers professional services to dogs of all sizes,
weights, and breeds. We promise to care for and treat your fur-baby with great care.
Reference:
Images found through google search
2
Company Profile
➢ Pawtastic Dog Grooming and Boarding is a pet-services business
offering dog grooming, day care, and boarding in Texas.
➢ Our vision is to provide the utmost care to both the client and their
pets by offering the highest quality of pet care, grooming services,
and pet care.
➢ Our mission is to provide affordable professional dog grooming and
boarding services by making the experience to be fun and relaxing
for you and your pet. We promise Pawtastic treatment.
As the owner of Pawtastic Dog Grooming and Boarding, it is our wish to ensure all
pet needs are professionally cared for. We at Pawtastic Dog Grooming and Boarding
hire the most qualified and experienced staff who will dedicate their time and energy
in providing a safe and relaxing environment. With the vision and mission in mind, we
will be providing dog grooming, day care, and boarding services for all dog breeds.
3
Purpose
➢ Information provided includes:
▪ Contribution Margin
Analysis
▪
Break Even Analysis
▪ Cost of Services (COS) Schedule
▪
Income Statement
▪ Variances
I will share information concerning the contribution margin analysis, break even
analysis, and the profitable gains in the foreseeable future. In addition, sales cost will
also be discussed in comparison to the cost of services rendered to highlight the
amount of profit the company will achieve.
4
Methods
➢ Sustainability
▪ AICPA Code of Ethics
▪ Integrity
▪ The Public Interest
▪ Responsibilities
Pawtastic Dog Grooming and Boarding operates by following the American Institute
of Certified Public Accountants (AICPA) Code of Ethics and by-laws, as well as, other
acceptable accounting standards. This includes but is not limited to operating with
integrity, using good judgments that will serve the public interest and honor their
trust, as well as exercising objectivity and independence in all activities.
All financial statements included in this presentation were prepared according to
generally accepted accounting principles (GAAP) standards and contains accurate and
relevant information. By using this information and operating ethically, Pawtastic Dog
Grooming and Boarding will be able to achieve it goals and mission. Twice a year the
employees attend professional training to ensure they are familiar with the newest
grooming technology and techniques as well as how to care for the dog entrusted to
our care.
5
Financial Strategy
Consultation
Analysis
Solutions
Monitor
and Review
To ensure we meet our vision and mission our products and procedures will be
monitored and review on a daily basis, seeking consultation and/or changes as
needed. The owner and employees will consult with each customer to learn their
preferences and create a trustworthy relationship. We will review our products
regularly seeking the highest quality of products while still maintaining an affordable
price. When a situation happens we will seek agreeable solutions.
6
Costing Systems
➢ Job Order Costing
▪ Cost for each manufactured/services quantity of product
➢ Process Based Costing
▪ Cost for each manufacturing department or process
➢ Activity Based Costing (ABC)
▪ Allocating factory overhead that uses multiple factory
overhead rates based on different activities
Pawtastic Dog Grooming and Boarding utilizes the job order costing since it will
provide three different services in its facility. Services provided include boarding, day
care, and grooming, with each client having the option to use only one service or a
combination of services per visit. This will give us the option to view each dog as a
unique job to accumulate and report costs based on each dog. By using the job order
costing method, clients will be billed as soon as services are rendered and services
are only recorded upon completion. This method will also allow us to bill clients on a
weekly, monthly, or quarterly basis which will allow us to secure deferred revenues or
advance payment.
The process based costing system would not efficiently record and accumulate costs
for the company as it is used to record information based on nearly identical services.
The services provided by Pawtastic Dog Grooming and Boarding vary significantly
from each other. Cost would then be determined on each individual service and not
on individual dogs. It would be difficult to track the cost of each dog in order to
accurately estimate the cost of each services provided by the company.
7
Costing Systems
➢ Activity Based Costing (ABC)
▪ Allocating factory overhead that uses multiple factory
overhead rates based on different activities
The Activity Based Costing (ABC) method identifies and assigns costs to overhead
activities and then assigns those costs to products. This would not be an effective
costing method for Pawtastic Dog Grooming and Boarding. The ABC method is based
on the concept that only a few of the inventory items in a facility are used on a
regular basis, with the remaining items being accessed at much longer intervals. It
looks at the whole cost of a single service in comparison to looking at one aspect of
the service.
8
Selling Prices
➢ Cost Behavior
➢ Variable Costs
➢ Fixed Costs
➢ Mixed Costs
There are a few different factors we can consider to determine our prices. Cost
behavior is the way a specific cost reacts to changes in activity levels. Cost may stay
the same or may change in response to a change in activity. Variable costs are costs
of labor or materials that change with sales. The amount of materials uses and labor
required is dependent upon the number of dogs being services, variable costs will
change. Fixed costs are cost that stay the same and are not dependent on the
number of services performed. Mixed cost contain components of both variable and
fixed cost behaviors.
Pawtastic Dog Grooming and Boarding will be utilizing the fixed cost behavior to
accurately estimate its fixed monthly cost needed to operate each service. This will
also assist in estimating the amount needed to charge for each service.
9
Selling Prices
➢ Variable Costs
▪ Grooming $9.97
▪ Day Care $4.65
▪ Boarding $7.35
➢ Fixed Costs
▪ Grooming $2,367.91
▪ Day Care $858.44
▪ Boarding $1,378.97
➢ Services
▪ Grooming: $25 per dog, 5 dogs daily
for 30 days
▪ Day Care: $
18
per dog, 22 dogs daily
for 30 days
▪ Boarding: $25 per dog,
12
dogs daily
for 30 days
The variable cost for grooming is $9.97 and the fixed cost is $2,367.91. There will be 5
grooms per day at $25 per dog, the total amount earned from grooming per month
(assuming 30 days a month) would be $3,750. After deducting variable costs and
fixed cost totals, the company will have a total profit of $1,372.12 per month in
grooming.
The day care services revenue will be $
11
,880 (18 dogs x 22 daily x 30 days) and the
foreseeable profits in this service would be $11,0
16
.91 ($11,880 revenue – $4.65
variable cost – $858.44 fixed cost).
The revenue for the boarding services would be $9,000 (25 dogs x 12 daily x 30 days)
and the foreseeable profits in this service would be $7,6
13
.68 ($9.000 revenue –
$7.35 variable cost – $1,378.97 fixed cost).
The estimated monthly profits for Pawtastic Dog Grooming and Boarding is
$20,002.71.
10
Target Profits
Services Target Profit 1 Target Profit 2
Grooming $1,000.00 $1,500.00
Day Care $4
17
.00 $667.00
Boarding $583.00 $909.00
The minimum target profits as highlighted above were chosen based on analyzing the
effects of changes in selling prices on profits and the effects of changes in costs on
profits. The target profit also helps us to estimate the sales needed to acquire the
required targeted profits.
For an example, if the current cost for grooming services is $25 per dog and 5 dogs
per day, the company will have to decide when to increase selling prices and/or the
number of dogs to achieve the second targeted profits.
11
Contribution Margin
Grooming Day Care Boarding
Sales price $25.00 $18.00 $25.00
Variable Cost per unit $9.97 $4.65 $7.35
Contribution Margin $
15
.03 $13.35 $17.65
➢ The excess of sales over variable costs
➢ Provides insight into the profit potential of the company
The contribution margin is a product’s price minus all associated variable costs. By
calculating the contribution margin, owners are able to compute the breakeven and
target income sales, which can be used to decide how to price the services rendered.
The contribution margin highlighted in the table above can also measure how growth
in sales can translate to growth in profits. Once the fixed costs are covered, any
additional contribution margin increases income from services.
The grooming services has a contribution margin of $15.03, the day care services is
$13.35, and the boarding service is $17.65. This is the total revenue earned on a daily
basis within each service minus any variable cost it may have. The additional costs the
company will incur is from its fixed costs.
12
Financial Statement – COS
The company started operations this year, making a $5,000 purchase to ensure there
were sufficient materials to begin services. Materials were purchased in large
qualities, leaving an ending balance for materials of $3,000 which can be used in
future months. The total overhead and COS for the initial month is estimated to be
11,040. The COS statement above also is the starting point that will be used to
estimate the amount of services that needs to be rendered to earn money back plus
additional amount for a profit.
13
Income Statement
From the income statement above, we can expect a monthly revenue of $17,512.
We’ve already calculated the COS and estimated it to be $11,040 and expenses
totaling $3,173. We can estimate a monthly net income of $3,299. This is the total
amount of money the company will have remaining after paying out all expenses, and
contributing to the cost of goods sold.
14
Variance Analysis
A favorable cost variance occurs when the actual cost is less than the standard cost.
An unfavorable cost variance occurs when the actual cost exceeds the standard cost.
The price variance identifies if the company paid too much for each service. The
quantity variance identifies if the company used too much material or hours to
complete services. Since the groomer direct labor time variance is unfavorable, we
will need to work towards cutting labor which could mean hiring less people and
cutting hours. However, the groomer labor rate variance is favorable which means
that the rate of pay selected is good but the company will have to reduce hours taken
to complete task.
15
Addendum
Cost Classification
References:
AICPA Professional Code of Conduct. (n.d.). Retrieved from
https://pub.aicpa.org/codeofconduct/Ethics.aspx
Managerial Accounting 14th Edition Retrieved from
https://ng.cengage.com/static/nb/ui/evo/index.html?snapshotId=462822&id=16255
0367&eISBN=9781337270786
16
Addendum
Contribution Margin
17
Addendum
Break Even Analysis
18
ACC
2
02 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
o Consumed 80% of the purchased materials
• Direct labor: $8,493.33
• 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.
The other costs incurred by the business include:
• General and administrative salaries
o Receptionist: $1,950
o Owner salary: $500
• Depreciation: $165
Established Sales
Price
Number of Items Sold per
Day
Collars
$20 33
$24 28
$28 23
Leashes
$22 28
$26 23
$30
1
8
Harnesses
$25 25
$30 22
$35 20
1
• Rent: $750
• Utilities and insurance: $600
• Scissors, thread, and cording: $1,200
• Loan repayment: $550
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.
2
- ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix
Variance
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
- Milestone Two: Market Research Data
You plan to open a small business for manufacturing pet collars, leashes, and harnesses. You
have found a workshop space you can use for sewing your products. After some research and
planning, you have estimates for the various operating costs for your business.
The total square footage for the sewing rooms is
1
,500 square feet broken into three areas
(500 square feet each). You have taken out a loan for start-up costs, and the monthly
payment is $550; it goes into effect immediately and should be accounted for in your costs.
You will also collect a modest salary for the first year of $500 per month; remember to divide
evenly among the services.
Salary and Hiring Data
• One collar maker, who will be paid $16.00 per hour and work 40 hours per week
• One leash maker, who will be paid $16.00 per hour and work 40 hours per week
• One harness maker, who will be paid $17.00 per hour and work 40 hours per week
• One receptionist, who will be paid $15.00 per hour and work 30 hours per week
Other Costs
• Rent: $750 per month; allocate based on square footage
• High-tensile strength nylon webbing—$12 per yard of webbing
o 3 collars per yard of webbing
o 2 leashes per yard of webbing
o 2 harnesses per yard of webbing
• Polyester/nylon ribbons—$9 per yard of ribbon
o 3 collars per yard of webbing
o 2 leashes per yard of webbing
o 2 harnesses per yard of webbing
• Buckles made of cast hardware—$0.50 per buckle
o 4 buckles used per collar
o 3 buckles used per leash
o 8 buckles used per harness
• 3 industrial sewing machines at $3,300 each for a total of $9,900; depreciation is $165 per
month (5-year life)
• Utilities and insurance: $600 per month; allocate based on square footage
• Scissors, thread, cording: $1,200
• Price tags: $250 for 2,500 ($0.10 each)
• Office supplies: $2,400 or $200 per month
• Other business equipment: $2,000
• Loan payment of $550 per month
• Salary drawn of $500 per month
1
- ACC 202 Milestone One: Operational Costs Data Appendix
Salary and Hiring Data
Other Costs
Report for [Company Name]
[Note: To complete this template, replace the bracketed text with your own content. Remove this note before you submit your paper.]
Investor Report for [Company Name]
[Your Name]
[Company Name] 1
Southern New Hampshire University
Introduction
[Outline your company’s business and your vision for its future.]
[Introduce the company and its business. What is your vision for the future of the business? What do you hope to achieve? Where do you see the company in five years or ten?]
Purpose
[Explain the purpose of the report and what you hope to convey about the company and its financials.]
[What do you plan to communicate, and why should your investors pay attention? In other words, try to persuade your investors that the accounting information you are about to share is important.]
Methods and Approach
[Explain some management accounting methods you used to determine your costing strategy, evaluate your financial information, etc., and explain how these methods support the mission and vision of the company.]
[Briefly describe how your report and the data it represents adheres to industry standards and the AICPA code of ethics. In other words, why should your investors trust that you are delivering accurate financial data and that your decision-making process has been ethical?]
Financial Strategy
[In this section, review your original business plan and costing strategies. Remove this note before you submit your paper.]
Costing System
[Outline why the job order costing system works best for your business. Explain in detail the use of job order costing for this business. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense.]
Selling Prices
[List the selling price you chose for each product.]
[Explain and defend the selling prices you established for each product. Why did you choose these prices? Be sure to reference your cost-volume-profit analysis in your defense]
Contribution Margin
[Copy and paste your completed table from the “Contribution Margin Analysis” tab of your Project Workbook.]
[Share and explain your contribution margin per unit. How did you arrive at these numbers? Be sure to reference your cost-volume-profit analysis in your defense.]
Target Profits
[Copy and paste the completed table from the “Break-Even Analysis” tab of your Project Workbook.]
[Specify the break-even points you determined for achieving different target profit levels. Then, explain and defend the target profits you selected for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense.]
Financial Statements
[This section is designed to have you assess your financial performance to date. Remove this note before you submit your paper.]
Statement of Cost of Goods Sold
[Copy and paste your table from the “COGS” tab of your completed Project Workbook.]
[Compare the actual cost of goods sold over the last month and evaluate the company’s performance against the budgeted benchmarks. Are the numbers close to what you expected? Interpret the performance and explain what happened.]
Income Statement
[Copy and paste your table from the “Income Statement” tab of your completed Project Workbook.]
[Based on your income statement, logically interpret the business’s performance against the provided benchmarks. Did the company do as well as expected? Explain what happened.]
Variances
[Copy and paste your table from the completed “Variances” tab of your Project Workbook.]
[Illustrate the variances observed between the planned and actual values for the direct labor time and the direct materials price for collars. What changed?]
Significance of Variances
[Share a summary of your variance analysis. Were the variances favorable or unfavorable?]
[Evaluate the significance of the variances. Are the variances favorable or unfavorable? What does it mean? Explain whether and how your evaluation will affect your budgeting and planning decisions for the next month or quarter.]
References
[Include any references cited in your paper in full APA format. Don’t forget to include in-text citations as well.]
E
x
port
Summary
Each table was converted to an Excel worksheet. All other objects on each Numbers sheet were placed on separate worksheets. Please be aware that formula calculations may differ in Excel.
Instructions
Instructions
Table 1 Instructions
Instructions – Milestone 1
Cost Classification
Variable
and
Costs
Instructions – Milestone 2
Contribution Margin
Analysis
Break-Even Analysis
Instructions – Milestone 3
COGS
Income Statement
Variance
s
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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. | ||||
| Choose a price range and calculate: | Create a Cost of Goods Manufactured Schedule | |||
| Location | Grooming | |||
| Vision | Day Care | |||
| Mission | Boarding | |||
| 2. | ||||
| Identify the following: | Calculate the break-even units | Create an Income Statement | ||
| Direct | Materials | Revenue will be provided end of week 4 | ||
| Diret | Labor | |||
| Manufacturing | Overhead | |||
| Period Costs | Calculate the break-even for target profits | |||
| 3. | ||||
| Calculate the Variable & Fixed Costs for: | Calculate for the Grooming line: | |||
| Direct Labor | ||||
| Direct Labor Rate Variance | ||||
| Direct Materials Efficiency Variance | ||||
| Direct Materials Price Variance |
&”Calibri,Regular”&10&K000000ACC202 – MANAGERIAL ACCOUNTING
Instructions – Milestone 1
| 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 | |||||
| Modest monthly draw of $ | 600 | ||||
| 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 | |||||
| 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 | |||||
| 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 | |||||
| 12 Kennels; | Depreciation | ||||
| 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 | |||||
| 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 | |||||
&”Calibri,Regular”&10&K000000ACC202 – MANAGERIAL ACCOUNTING
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 | Direct Material |
Direct Labor |
Overhead | Period Costs | ||||||
| Salary – Collar maker | ||||||||||
| Salary – Leash maker | ||||||||||
| Salary – Harness maker | ||||||||||
| Salary – Receptionist | ||||||||||
| High-tensile strength nylon webbing | ||||||||||
| Polyester/nylon ribbons | ||||||||||
| Buckles made of cast hardware | ||||||||||
| Depreciation on sewing machines | ||||||||||
| Utilities and insurance | ||||||||||
| Scissors, thread, and cording | ||||||||||
| Price tags | ||||||||||
| Office supplies | ||||||||||
| Oter business equipment | ||||||||||
| Loan payment | ||||||||||
| Salary to self | ||||||||||
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Variable and Fixed Costs
| Milestone One – Variable and Fixed Costs | |||||||||
| Collars | |||||||||
| Variable Cost/Item | |||||||||
| $ 4.00 | Collar maker’s salary (monthly) | $ 2,773.33 | |||||||
| $ 3.00 | $ 55.00 | ||||||||
| $ 2.00 | $ 250.00 | ||||||||
| $ 0.10 | $ 200.00 | ||||||||
| $ 400.00 | |||||||||
| $ 183.33 | |||||||||
| $ 166.67 | |||||||||
| Total Variable Costs per Collar | $ | 9.10 | Total Fixed Costs | $ 4,028 | |||||
| Leashes | |||||||||
| $ 6.00 | Leash maker’s salary (monthly) | ||||||||
| $ 4.50 | |||||||||
| $ 1.50 | |||||||||
| Total Variable Costs per Leash | $ | 12.10 | |||||||
| Harnesses | |||||||||
| Harness maker’s salary | $ 2,946.67 | ||||||||
| Total Variable Costs per Harness | $ | 14.60 | 4,211.67 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Instructions – Milestone 2
| INSTRUCTIONS FOR MILESTONE 2 (Due Week 4) |
| Make sure to completely review the Rubric for Milestone 2 |
| ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs): |
| 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 |
| 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 |
&”Calibri,Regular”&10&K000000ACC202 – MANAGERIAL ACCOUNTING
Contribution Margin Analysis
| Milestone Two – Contribution Margin Analysis | |||||||
| COLLARS | LEASHES | HARNESSES | |||||
| Sales Price | $ 28.00 | $ 30.00 | $ 35.00 | ||||
| Variable Cost per Unit | |||||||
| $ 18.90 | $ 17.90 | $ 20.40 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Break-Even Analysis
| Milestone Two – Break-Even Analysis | |||||
| $ 4,202 | |||||
| Break-Even Units (round up) | 213.00 | 225.00 | 206.00 | ||
| Target Profit | $ 300.00 | $ 500.00 | |||
| 229.00 | 247.00 | 230.00 | |||
| $ 600.00 | $ 650.00 | ||||
| 240.00 | 259.00 | 238.00 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Instructions – Milestone 3
| INSTRUCTIONS FOR MILESTONE 3 (Due Week 5) | ||||
| Make sure to completely review the Rubric for Milestone 3 | ||||
| ITEMS TO COMPLETE FOR THIS MILESTONE (Purple Tabs): | ||||
| 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 from your Cost of Services Provided Schedule | ||||
| VARIANCES | ||||
| Use the data at the top of the schedule to calculate the following: | ||||
| Favorable / | Unfavorable |
&”Calibri,Regular”&10&K000000ACC202 – MANAGERIAL ACCOUNTING
COGS
| Milestone Three – Statement of | Cost of Goods Sold | |
| Beginning Work in Process Inventory | ||
| Direct Materials: | ||
| Materials: Beginning | ||
| Add: Purchases for month of January | $ | 20,000 |
| Materials available for use | ||
| Deduct: Ending materials | (4,000) | |
| Materials Used | $ 16,000 | |
| 8,493 | ||
| 1,765 | ||
| Total Costs | $ 26,258 | |
| Deduct: Ending Work in Process Inventory | ||
| $ 26,258.93 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Income Statement
| Milestone Three – Income Statement | |
| Revenue: | |
| $ 39,520 | |
| 35,080 | |
| 39,700 | |
| Total Revenue: | $ 114,300 |
| Cost of goods sold | (28,258) |
| Gross profit | $ 88,042 |
| Expenses: | |
| General and administrative salaries | $ 2,450 |
| 165 | |
| 750 | |
| $ 1,200.00 | |
| 550 | |
| Total Expenses | $ 5,175.00 |
| Net Income/Loss | $ 82,326.67 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING
Variances
| Milestone Three – Variance Analysis | |||
| Data for Variance Analysis: | |||
| Budgeted (Standard) Hours/Qty |
Budgeted (Standard) Rate |
Actual Hours/Qty |
Actual Rate |
| 160 | $ 16.00 | 180 | $ 16.50 |
| 560 | $ 9.10 | 620 | $ 10.00 |
| Variances for Collar Sales | |||
| Favorable/ Unfavorable |
Direct Labor Time Variance | ||
| (Actual Hours – Standard Hours) x Standard Rate | $ 320.00 | ||
| (Actual Rate – Standard Rate) x Actual Hours | $ 90.00 | ||
| Direct Materials Quantity/Efficiency Variance | |||
| (Actual Quantity – Standard Quantity) x Standard Price | $ 546.00 | ||
| (Actual Price – Standard Price) x Actual Quantity | $ 558.00 |
&”Calibri,Regular”&8&K000000ACC202 – MANAGERIAL ACCOUNTING