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Managerial Accounting

Project #2

Break-even Cookie Project

This project will focus on applying your knowledge product costing, breakeven analysis, and achieving a target profit.

For this project you will be a small business owner selling cookies. You will determine the name of your business and what type of cookies youd like to sell. Complete the following criteria in the excel workbook provided.

List your business name, type of cookie being sold, and your estimated quantity to be sold in your workbook. (Make sure to populate your estimated quantity to be sold or other areas of your workbook will not populate correctly).

1. Select any cookie recipe. In the workbook provided youll identify all of the ingredients, the direct materials to make the cookies. Include the cookie recipe in your workbook.

2. List all of the ingredients and record in your workbook. Determine the cost to purchase all of your ingredients. Calculate your total direct materials cost. You can do this buy visiting a local grocery store, or looking up the costs online (BJs, Sams Club, Walmart, etc.)

1. You can estimate here, and do not need to be scientific about figuring the ratio of ingredients. If your recipe calls for salt, purchase 1 container of salt. If youre unsure how many bags of flour youll need just estimate. Try to keep it simple!

3. Determine your direct labor cost. How many employees will you need to manufacture and sell your cookies? Record all of your employees and their pay rates. Determine how many hours each employee will work. Calculate your total direct labor cost.

4. Determine your manufacturing overhead costs. What other expenses will you incur to operate your cookie business? Think about what you know about indirect costs things you will need but cannot directly trace back to the cost of the cookies. Record and estimate all of your manufacturing overhead costs. Calculate your total manufacturing overhead costs.

5. Using the plant-wide overhead rate as your manufacturing overhead allocation method, calculate how much manufacturing overhead cost will be allocated to each cookie. Use number of cookies as your allocation base. Show your calculation!

6. Will you have any other operating expenses related to your cookie business? List any additional operating expenses you may have and estimate their cost.

7. After analyzing the cost to make a cookie determine how much you will sell your cookie for. Record your selling price.

8. Review your projected income statement based on your inputs from above. Make sure your cookie business is profitable or youll need to adjust your plan. What is your profit margin? How do you feel about your results?

9. Based on your selling price and total costs, how many cookies will you need to sell to breakeven? Use any of the three methods from Chapter 7 to calculate breakeven in units, show your calculation! (Hint you will need to determine which of your expenses are fixed and which are variable)

10. If you want to achieve a target profit of $50,000, how many cookies will you need to sell? Show your calculation!

Managerial Accounting Project \#2 Break-even Cookie Project This project will focus on applying your knowledge product costing, breakeven analysis, and achicving a target profit. For this project you will be a small business owner selling cookies. You will determine the name of your business and what type of cookies you'd like to sell. Complete the following criteria in the excel workbook provided. 1. Select any cookie recipe. In the workbook provided you'll identify all of the ingredients, the direct materials to make the cookies. List all of the ingredients and include your recipe in your workbook. 2. Determine the cost to purchase all of your ingredients. List the cost of all of the ingredients. Calculate your total direct materials cost. You can do this buy visiting a local grocery store, or looking up the costs online (BJ's, Sam's Club, Walmart, etc.) a. You can estimate here, and do not need to be scientific about figuring the ratio of ingredients. If your recipe calls for salt, purchase 1 container of salt. If you're unsure how many bags of flour you'll need just estimate. Try to keep it simple! 3. Determine your direct labor cost. How many employees will you need to manufacture and sell your cookies? Record all of your employees and their pay rates. Calculate your total direct labor cost. 4. Determine your manufacturing overhead costs. What other expenses will you incur to operate your cookie business? Think about what you know about indirect costs - things you will need but cannot directly trace back to the cost of the cookies. Record and estimate all of your manufacturing overhead costs. Calculate your total manufacturing overhead costs. 5. Using the plant-wide overhead rate as your manufacturing overhead allocation method, calculate how much manufacturing overhead cost will be allocated to each cookie. Use number of cookies as your allocation base. Show your calculation! 6. Will you have any other operating expenses related to your cookie business? List any additional operating expenses you may have. 7. After analyzing the cost to make a cookie determine how much you will sell your cookic for. Record your selling price. What is your profit margin? 8. Based on your selling price and total costs, how many cookies will you need to sell to breakeven? Use any of the three methods from Chapter 7 to calculate breakeven in units, show your calculation! 9. If you want to achieve a target profit of $0,000, how many cookies will you need to sell? Show your calculation! Grading: Each Project Criteria 1-10 is worth 10 points each. Make sure to complete each project criteria. Managerial Accounting Project \#2 Break-even Cookie Project This project will focus on applying your knowledge product costing, breakeven analysis, and achicving a target profit. For this project you will be a small business owner selling cookies. You will determine the name of your business and what type of cookies you'd like to sell. Complete the following criteria in the excel workbook provided. 1. Select any cookie recipe. In the workbook provided you'll identify all of the ingredients, the direct materials to make the cookies. List all of the ingredients and include your recipe in your workbook. 2. Determine the cost to purchase all of your ingredients. List the cost of all of the ingredients. Calculate your total direct materials cost. You can do this buy visiting a local grocery store, or looking up the costs online (BJ's, Sam's Club, Walmart, etc.) a. You can estimate here, and do not need to be scientific about figuring the ratio of ingredients. If your recipe calls for salt, purchase 1 container of salt. If you're unsure how many bags of flour you'll need just estimate. Try to keep it simple! 3. Determine your direct labor cost. How many employees will you need to manufacture and sell your cookies? Record all of your employees and their pay rates. Calculate your total direct labor cost. 4. Determine your manufacturing overhead costs. What other expenses will you incur to operate your cookie business? Think about what you know about indirect costs - things you will need but cannot directly trace back to the cost of the cookies. Record and estimate all of your manufacturing overhead costs. Calculate your total manufacturing overhead costs. 5. Using the plant-wide overhead rate as your manufacturing overhead allocation method, calculate how much manufacturing overhead cost will be allocated to each cookie. Use number of cookies as your allocation base. Show your calculation! 6. Will you have any other operating expenses related to your cookie business? List any additional operating expenses you may have. 7. After analyzing the cost to make a cookie determine how much you will sell your cookic for. Record your selling price. What is your profit margin? 8. Based on your selling price and total costs, how many cookies will you need to sell to breakeven? Use any of the three methods from Chapter 7 to calculate breakeven in units, show your calculation! 9. If you want to achieve a target profit of $0,000, how many cookies will you need to sell? Show your calculation! Grading: Each Project Criteria 1-10 is worth 10 points each. Make sure to complete each project criteria

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