ACC 207 Final Project Milestone One Guidelines and Rubric

Draft of Costs (Section I)

Overview: Classifying a company’s costs allows for an in-depth analysis of the impact that changes in output have on revenues, costs, and net income or net loss.

A cost-volume-profit (CVP) analysis will be completed in order to determine the breakeven point. Relevant costs will be used to prepare a flexible budget.

Additionally, an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale. Finally, a memo should be

prepared for management that summarizes the results of the quantitative analysis and makes recommendations for an optimal costing system to be ethically

used by key decision makers.

For Milestone One, you will use theMDE Manufacturing Budget (Table I) to analyze costs, contribution margin, and breakeven point for the bird feeder division of the company. In Tab 1 of your Student Workbook, classify costs as either product or period costs. Briefly explain the difference between the types of costs. Then,

analyze the actual costs and, using Tab 2 of your Student Workbook, complete a cost-volume-profit analysis to determine how many bird feeders must be sold at

the current cost and sales price level to earn a $10,000 profit and how much the sales price would have to increase to earn a $10,000 profit at the same cost and

sales volume level. Submit theStudent Workbook with Tabs 1 and 2 completed with your cost calculations and a 1–2 page Word document that explains the

implications of your findings and addresses all of the critical elements in Section I.

Specifically, the following critical elements must be addressed:

I. Costs

a) Classify all product and period costs appropriately.

b) Compute a cost-volume-profit analysis. What are the implications of this analysis?

c) Compute contribution margin per unit and contribution margin ratio.

d) Determine the breakeven quantity and the breakeven revenue accurately.

e) Determine if the company is breaking even. What are cost-volume-profit analysis implications on short-term planning?

Guidelines for Submission: Your paper must be submitted using the Student Workbook to present your calculations and a 1–2 page Microsoft Word document

with double spacing, 12-point Times New Roman font, and one-inch margins to explain your findings.

ACC 207 MDE Manufacturing Budget: Bird Feeder

I. Sales and Manufacturing Expenses: Budget and Actual (2014)

You will use this table to complete Milestones One and Two.

	Budget ($)	Actual ($)
Sales	1,050,000	991,700
Expenses
Materials – Cedar	225,000	248,160
Materials – Plastic	37,500	37,741
Factory Worker Labor	300,000	332,760
Materials – Indirect	3,000	2,585
Factory Depreciation	78,000	78,000
Factory Utilities	12,000	12,000
Factory Maintenance and Repairs	5,000	4,500
Shipping ($2.25/each)	112,500	105,750
Sales Commissions ($2.00/unit sold)	100,000	94,000
Office Rent	12,000	12,000
Advertising	20,000	20,000
Liability insurance	5,000	5,000
Office Depreciation	1,000	1,000
Office Salaries	48,000	48,000
Total Expenses	959,000	1,001,496

II. Contribution Margin: Static Budget and Actual Results (2014)

You will use this table to complete Milestone Two.

	Actual Results	Static Budget Amount
Units Sold	47,000	50,000
Revenues ($)	991,700	1,050,000
Manufacturing Costs ($)
Variable	621,246	565,500
Fixed	94,500	95,000
Gross Margin	275,954	389,500

III. Standard Variable Manufacturing Costs (2014)

You will use this table to complete Milestone Two.

	Static Budget Costs	Standard Input
Direct Materials: Cedar	225,000	3.0 ft/unit
Direct Materials: Plastic	37,500	1.0 ft/unit
Direct Manufacturing Labor	300,000	0.5 hrs/unit
Variable Manufacturing Overhead	3,000	0.3 ft/unit

IV. Actual Variable Manufacturing Costs (2014)

You will use this table to complete Milestone Two.

	Actual Costs	Actual Input
Direct Materials: Cedar	248,160	3.2 ft/unit
Direct Materials: Plastic	37,741	1.1 ft/unit
Direct Manufacturing: Labor ($)	332,760	.60 hr/unit
Variable Manufacturing Overhead	2,585	0.25 ft/unit