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PART 3: BUDGETING FOR A SNOWIE BUSINESS

Now assume the Snowie supplier increases the cost of a gallon of the Snowie syrup to USS8.00 (from its original cost of US$4.25). In response, you increase the selling price of a large Snowie to US$5.00,

REQUIREMENTS

1. Make the following assumptions (you can re-use your assumptions from Part I if you wish or you can change them).

1. Number of days you anticipate opening the Snowie kiosk per month
2. Number of hours you will work (no wages required) per day
3. Number of hours you will pay an employee to wock in the Snowic kiosk per day
4. How many Snowies you estimate you will sell on an average dav

2. Prepare a budgeted contribution margin income statement for one month using the dats given in Part 1 and the assumptions that you listed in Part 3, Provide a separate line for cach variable cost and for cach fixed cost. Whar other factor should you consider before deciding to start a Snowie business

SNOWIE EVENT Assume that Main Sureet Kent, an organization that hoses outdoor events in downtown Kent, approaches you about bringing your Snowie kiosk to the Octoberfert in Kent for one day in October. Main Street Kene will provide the cups for the event that are branded with the Kent Oetoberiest logo, so you will not have any cup costs for this event. Main Street Kent will also not be charging you a registration fec for this event. Main Sueet Kent will allow you to advertise your business in its mailings for two months at mo cost and asks you to cut your Snowie price for this one event to US\$3.00 in exchange for the free advertising. You have no othet event scheduled fot this one day in Octobet, and you would work the event by yourself (you will not pay an employoe for this one-day event). You anticipate that you will sell 200 Snowics on this one day at Octoberfest. Do you accept Main Street Kent's special price offer? Why or why not? Support your answer. PART 3: BUDGETING FOR A SNOWIE BUSINESS Now assume the Snowie supplier increases the cost of a gallon of the Snowic syrup to US\$8.00 (from its otiginal cost of US\$4.25). In response, you increase the selling price of a large Snowic to US\$5.00. REQUIREMENTS 1. Make the following assumptions (you can re-ase your assumptions fram Parr 1 if you wish or you ean change them): 2. Number of days you anticipate opening the Snowie kiosk per month b. Number of hours you will work (no wages requited) perday c. Number of hours you will pay an employec to work in the Sinowic kiosk per diy d. How many Snewries you carimate you will sell on an averase day ABOUT IMA" (INSTITUTE OF MANAGEMENT ACCOUNTANTS) IMA:, the asociation of accountante and financial profectionals in buaincss, is one of the larges and most respected associations focused eachusively oe advancing the management accounting profecsion, Globally, IMA supports the profecsion through iesearch, dhe CMA* (Certified Management Necountant) poogram, coetinuing oducation, networking end advocacy of the highest ethical beniness practices. IMA has a elobal necwork of more thas 85,000 members in 140 cotuntries and 300 professional and student chupeen. Headquarered in Montvale, N J. USA IMA provides bealmed services through is four global regionsThe Anericas, Asia Pxcific, Furope, and Middle East/lndia

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